New York provides a variety of prime commercial real estate for those who are interested in starting their own business. However, before you move into these properties, you must sign a commercial lease. You should ask a few questions before you agree to sign a lease for a commercial property.
How long does the lease last?
If you are new to commercial leases, you may assume that the terms operate the same way as residential leases. But most residential leases last for six months to a year. Commercial leases typically last longer, often for up to five years. If you sign a five-year contract, you agree to owe the landlord a total of five years’ worth of rent.
Who is responsible for capital expenditures?
In commercial real estate, the business owner often bears responsibility for capital expenditures instead of the landlord. Capital expenditures refer to the money required to maintain your land, equipment and buildings. Examples of common capital expenditures include:
• Roof repairs and replacements
• HVAC system repairs
• Broken toilets and clogged pipes
• Hazardous parking lots and sidewalks
What happens to the lease if you sell your business?
If you decide to sell the business before your lease ends, some property owners will allow you to assign the lease. This means that someone else will take on the lease. Other landlords will want to renegotiate with the new owner. The sale of your business can be directly affected by the lease terms, so it is essential for you to to know what your options may be in case a sale is part of your business’s future.
Does this lease benefit your company in the long term?
Commercial leases and commercial real estate differ from residential real estate. When examining your potential lease, you will save time and money by treating the commercial lease like a business document.