It’s no secret that today’s businesses are growing rapidly — in fact, e-commerce is predicted to increase at a compounded annual average rate of 10% within the next five years. This means more industrial rental warehouses will soon fill up. So if you’re in the market for a warehouse space, it’s important to find a good commercial lease. Let’s take a look at a few red flags you should keep in mind to know when a lease may not be the best option.
Vague fees and terms: Everything in a commercial lease should be clear and concise — and written down in the contract. Any fees that need to be paid or tasks that need to be done by either the landlord or the leaseholder should be clearly stated in the contract. So if something is kind of vague or unclear, make sure not to sign it before it’s corrected. Additionally, never take the landlord’s word for things that will be taken care of — any terms that are agreed upon should be written in the lease.
An unfair relocation clause: Most commercial leases will have a relocation clause, which allows the landlord to transfer businesses to different spaces or floors. However, some relocation clauses may be more unfair than others. If the lease states that you’re required to pay for moving expenses or any renovations, then you may want to think twice before signing the lease. Moving expenses, changes in rent, and the quality of the distribution warehouse space should all be discussed when determining the relocation clause.
A too-short or too-long lease: When you’re signing a lease for industrial rental warehouses, it’s important to ensure you have a good amount of time in the lease — and the option to renew. If you get sucked into a lease that’s too long, you may find that you’re stuck in a place that’s too small for your growing business. Or if you have a too-short lease without the option to renew, you may find yourself with no industrial warehouse space to use. Leases for industrial rental warehouses should be a good amount of time that allows for business growth without being trapped in the same location for years to come.
Signing a commercial lease is an important part of allowing your business to grow. So keep these red flags in mind to ensure you don’t make a mistake that could cost you big time.