Archive for July 24, 2017

Negotiating a Retail or Commercial Lease? Try These 3 Tactics

Written by Business Success on . Posted in Leasing Retail Space

leasing retail spaceLooking to lease retail space or a commercial building for the first time is an exciting moment for a company owner. Even if you have been operating out of a home office for years, taking that next step announces that you and your business are moving on to the next level. Considering the importance of the moment, it can be quite emotional.

Of course, renting commercial real estate requires a meticulous approach and unwavering attention, so it’s best not to let emotions get in the way.

When your business is looking to lease a warehouse or retail space, there are a number of important factors you should consider. Keeping the following tips in mind when negotiating your retail lease will help you feel more confident.

Try for a Lower Basic Rate

The basic rental rate is usually determined per square foot rented or as a percentage of gross sales, generally deferring to the larger number. Typically when leasing retail space, rates range from $.90 to $3 each month per square foot, or 6% gross sales.

Naturally, you will want to negotiate for a fair rate. The more money you can save and reinvest into your business the more quickly it can grow and blossom.

Graduated Lease Rates

If you aren’t able to negotiate your basic rates any lower, then try to work out a graduated lease rate or a rate which starts off at a lower baseline and then climbs over time. This will ensure that you set up a little more protection for your business at the onset, when you experiment with how to increase your profits, to the end of the lease when hopefully your business is better established.

Limits on “Triple Net” Charges

The triple net is a monthly charge that covers taxes, insurance, and general maintenance. Limiting these fees when leasing retail space can be tremendously helpful, as triple net charges are widely variable, ranging between 10% and 35% of the basic rent each month.

There are a number of factors to consider when leasing retail space, including where you want your space to be located, how big of a space you need, even what type of building you need –renting a warehouse space is becoming more popular, increasing 86.2% since the year 2000 thanks to their lower price and greater flexibility.

If you’re in the midst of leasing commercial property or negotiating your terms, remember the tips listed above. Hopefully, this guide has given you the tools you need to help your business grow.