Tenants are not commercial real estate professionals, rarely know the commercial leasing market or which commercial buildings have space to lease, which puts them at a disadvantage when looking for space, going through the leasing process, and negotiating the business terms of a commercial lease for their business, without a tenant representative.
A commercial lease is important to the tenant’s business plan. A commercial lease “puts the tenant in business” it provides a tenant with the right to occupy and use space in a commercial building for a defined period of time.
The rent and other elements that add to the occupancy cost of a lease, such as pass-through operating expenses, utilities, etc., are significant expenses for a tenant. Rent or occupancy cost in excess of the tenant’s budget can place a financial strain on the operating expenses of a business, create financial hardship and threaten the survivability of a business.
Leasing and operating commercial buildings is a landlord’s business, while tenants often have limited knowledge of the commercial real estate market conditions, the operations of commercial buildings, and the commercial lease document. No two commercial leases are alike, and some are drafted to be far to each party while others are drafted solely for the benefit of the party preparing the document (commercial leases are usually drafted by the landlord).
A commercial lease should be an asset to a tenant’s business, depending on how it is negotiated, it can however, be a liability to the operations of the business.
And 3 to 10 years is a long time to live up to a lease that is onerous and negatively affects business operations.
A commercial lease has many provisions that affect tenant’s occupancy costs, and place restrictions on tenant business operations.
Tenants are not commercial real estate professionals. They are likely, the only players in the commercial leasing process who are not real estate professionals or affiliated industry professionals. All the other players in the transaction earn their livelihood working the commercial leasing process.
In this respect, tenants (without a tenant representative), are at a disadvantage when looking for space, going through the leasing process, and negotiating the business terms of a commercial lease, for their business on their own.
Because tenants rarely know the commercial leasing market, it is advisable they rely on commercial leasing agents to find them the best location with the most advantageous lease terms.
Tenants should select a commercial agent to represent them and protect their business interests in their initial search for a location, the analysis of spaces, though the commercial lease negotiations and up to the moment of their move to the new premises
This information is for informational purpose and not intended to be investment advise, and should be explained to you in detail. You should always feel free to consult an attorney and/or tax adviser to obtain further information you deem necessary. I want you to be prepared