How to Find Commercial Property to Rent
Created by FindLaw's team of legal writers and editors | Last reviewed September 26, 2022
Trying to find the best location for your new business takes time and effort. Before you begin pounding the pavement, read along as FindLaw has put together important information for you to consider when going on a real estate hunt. Simply put, a commercial lease may be the best option for new business because:
- A business can easily move to a different location when its needs change.
- Lease terms are shorter than mortgage terms.
- It frees up capital to use in other areas of the business.
Most of the time, buying commercial property is not even an option for a new business.
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What factors should I consider when I find commercial property to rent?
Every business will have different needs to consider when when trying to find commercial property to rent. A retail business, for instance, will probably consider location as the most important factor, while location is less important to a business with very little in-person contact with its customers. Think about the following when choosing commercial property:
- Location: If the intended use for a property is retail space, location may be the most important factor. Take into account whether the location is accessible to customers, what other businesses are located in the area, the safety of the location, and whether other nearby companies will help generate business.
- Affordability: After creating a budget, choose an affordable rental.
- Parking: Consider whether the location provides enough parking for customers. If it does not, a city may require the business to make a plan to provide additional parking before granting the required permits.
- Physical structure: Determine whether the property has the infrastructure the business needs. Take into account whether the building is large enough, whether it has enough electrical power, and whether the business can occupy the building without having to make substantial alterations.
- Zoning: It is pointless to lease a property if a zoning regulation prohibits the business's intended use. It is important to research applicable zoning ordinances before signing a commercial lease agreement.
Are there important differences between a commercial lease and a residential lease agreement?
A commercial lease is an agreement between a landlord and a business for the rental of commercial property. There are several important differences between a residential lease and a commercial lease agreement. The differences include:
- Fewer legal protections for business tenants: Because the laws that govern residential leases do not apply to commercial lease agreements, business tenants will receive less protection from landlords that charge hefty security deposits or invade expected privacy rights.
- No standard lease agreement forms: Unlike residential leases, commercial leases are tailored to each individual agreement. Consequently, it is necessary to make sure that the terms of an agreement meet the needs of the business.
- Negotiable terms: Commercial landlords are usually more willing to negotiate the terms of a lease than residential landlords. Depending on the conditions of a commercial market, a landlord may agree to favorable terms regarding rent, rent increases, the length of the lease, the ability to assign a lease, and improvements.
What terms should a commercial lease include?
It is important to put the terms of a commercial lease agreement in writing. A lease agreement should include terms that address the following issues:
- A use clause (restricts how the tenant can use the property)
- Rent increases
- Length of lease
- The party responsible for paying utilities, property taxes, insurance fees, and the cost of maintenance
- Required deposit
- Promised improvements by the landlord
- Termination rights and consequences
- A contingency clause related to zoning
- Rights of a tenant to assign or sublet the property
- Restrictions on the landlord from renting to competitors
A landlord may be willing to renegotiate many of these terms when a lease ends, especially in poor economic times.
How do I find out about zoning for a commercial property?
Zoning ordinances regulate the use of property. Commercial zoning regulations control the type of activity permitted and the type of businesses that can occupy a zoned district. Zoning is categorized as residential, commercial, industrial, agricultural, and recreational. Cities, counties, and municipalities enforce zoning ordinances and may allow areas of mixed use.
Before signing a commercial lease agreement, determine whether the zoning for that area will allow the intended use. A business can find applicable zoning ordinances by checking with the department of the local government that handles zoning issues. It is also important to find out whether zoning regulations restrict the number of similar businesses allowed in a specific area, whether a conditional approval requires the business to meet certain requirements, and whether regulations will require the business to provide more parking.
Getting Solid Legal Advice
As you are narrowing down your commercial real estate options, give yourself the peace of mind you deserve. Speak to a business and commercial law attorney today to help you understand the law and discover the perfect location.
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