A commercial lease is a contract between a landlord and a business for the rental of property. Most businesses choose to rent property instead of buying it simply because it requires less capital.
When signing commercial leases, it is vital to note the following:
1) Research
When renting commercial spaces, research the location and the building first. According to Hoppler, Cavite is a great place to look for commercial spaces for rent and establish business hubs due to the low cost of labor and high supply of manpower. Aside from being familiar with the location, research on hidden costs so that you will not be ripped off by aggressive landlords. Pay attention to negotiability and flexibility. Commercial leases are generally subject to negotiation. Your power, however, depends on the hotness or coldness of the local rental market. If there is an abundance of commercial spaces, you might win. If the rental space is in-demand, then your chances might be slim.
2) Rent
Is the rent of reasonable price? Have you tried canvassing other commercial spaces in the area? How about the estimated additional charges? For real estate fees, as detailed by FitSmallBusiness, most commercial properties are quoted by the year, month or on a per square foot basis. Usable sq. footage and the sq. footage that you are charged for are different. Be mindful of the distinction.
3) Lease Terms
It’s vital to know the type, terms or length of lease.
Type- There are three types of lease: percentage, net and gross. Percentage is paying a base rent plus percentage of sales. Net lease is paying for other expenses related with running the property. It includes taxes, insurance and maintenance. Gross lease, on the other hand, includes fees that are accounted for in the per sq. price estimate.
Terms or Length- Keep in mind the start and expiration of your lease term. Also, identify if the commercial space that you will rent in Cavite will opt for the short-term or long-term leasing and be clear with it to your landlord. Renewal options can also be available.
4) Tenant Improvements
As stated by Entrepreneur, cost of improvements, are often paid by the landlord, and prorated over the length of the lease. Commercial leasehold improvements are the customized alterations made to the building. These may range from wall changes to floor alterations. Again, consult with your landlord and put these into writing. Recognize the financial responsibilities of your landlord as well as yours.
5) Exclusivity rights
Exclusivity rights have been an issue between the landlord and the tenant. There have been reports regarding misunderstandings between the two parties. Basically, exclusivity rights are provisions within a lease that prohibits landlords from leasing another tenant for the same business purpose as the existing tenant. Again, it should involve a thorough discussion with your landlord. Issues start to arise when landlords do not keep their word on prohibiting other tenants. As for the tenants, seeking clarity from the landlord is a crucial matter. They should also make sure that leasing agreement is wide enough to cover their core business and necessary services they wish to pursue.
These are just some noteworthy things to remember when choosing a commercial space for rent in Cavite. One of the most important things to also consider is how you relate with your landlord. You are venturing on a big investment so be sure to open communication lines.
