GOLDENRULES OFCOMMERCIALREAL ESTATELEASING

By: Riley Mark

Abstract

A commercial lease is a form of legally binding contract made between a business tenant -

your company - and a landlord. The lease gives you the right to use the property for business

or commercial activity for a set period of time. In return for this, you will pay money to the

landlord. The lease will also outline the rights and responsibilities of both the landlord and

the tenant during the lease period. Here in this guide, you will find all the terms and rules

related to commercial lease.

I. Introduction

A commercial real estate lease is a rental agreement that allows a business to rent

commercial space from a landlord. Commercial leases come in three main forms: full-service

leases, net leases, and modified gross leases. The process of identifying, negotiating, and

signing a commercial lease is a long process and it’s important to understand the required

steps which are discussed in detail in this guide.

When leasing property, searching for internet and networking services is often a last-minute

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II. Commercial Real Estate Property Leases

As long as local and other zoning ordinances permit business use, any public or private facility

can be used for most general types of businesses. Because home-based businesses are

operated in properties zoned for residential use and not commercial use, they are often

subject to many restrictions on the type of business that can be operated, as well as subject

to severe limitations and restrictions on conducting face-to-face business from a home-based

office.

What to Consider Before Deciding on a Lease

Two main considerations to focus on when deciding on the right type of space to lease for

your business are the location and the type of lease being offered. A mall might offer a great

location for a retail business but you will likely have to share a portion of your profits with

your landlord in addition to paying a base rent. Leasing industrial or business park space is an

alternative worth considering for retail businesses because the rents are cheaper and it is

unlikely you will have to share your profits.

Commercial Property

Commercial real estate can be land, property, or facilities that are either zoned for or used

exclusively for business purposes. In most cases, people cannot live in a building zoned for

commercial business purposes and many local ordinances may also have restrictions on what

and how commercial property is used. And, to make matters even more limiting, local

community and homeowners associations and individual landlords may have their own

restrictions.

It is extremely important when looking for commercial properties to lease that you are

completely honest with realtors and landlords about what you plan to do with the property

and any future plans you may have to improve the property or expand your business. For

example, if you are planning on setting up a retail shop or place of business where you expect

a lot of customers coming and going throughout the day you need to let the landlord know in

advance.

If you don't and suddenly turn and office into a thrift store you and your business might end

up on the street for breaching the lease (and you may still be financially liable for the rent

until the place is leased again.) It pays to take your time, think about what you want, and ask

questions about restrictions. Here are some of the most common types of properties you can

lease and little about each one.

Types of Commercial Properties Most Business Owners Lease

Commercial property does not just refer to stand-alone office buildings but also includes

commercial parks, business parks, and retail malls and outlets. In addition to traditional low-

rise and high-rise commercial office buildings, businesses (and individuals) lease in:

Business Parks

A business park is a group of buildings designed for general and light-industrial use business

purposes. Business park rents are often cheaper than retail properties and comparable to

industrial park rents. Many doctors and other service professionals lease space in business

parks.

Industrial Parks

This type of commercial property consists of buildings divided into units or spaces that are

often warehouses or other large, unfinished spaces. Industrial parks are usually zoned for

heavy-industrial purposes but are often also used for other types of businesses.

Industrial park spaces can be used for manufacturing and other heavy industrial purposes,

like warehouses, can be converted into more traditional office spaces, or serve a combination

of business uses.

Industrial spaces that have store-front window exposure, are now also used by many small

retail businesses just getting started. Some industrial parks have become so attractive that on

the surface they are hard to distinguish from business parks except they typically have large,

garage-style doors for access.

A determined business owner can usually find industrial leases that have been renovated or

built-out by previous tenants into office or retail space. These semi-upscale spaces still often

cost far less to lease than other types of commercial properties.

Commercial Retail Property

This type of property includes malls, strip malls, and other facilities suitable for store-front

types of businesses. In addition to facilities designed either specifically or exclusively for retail

businesses, many retail business owners also lease units in industrial parks and business

parks.

III. Questions To Ask Before You Sign A Lease

About a year ago, the owner of a small law firm met a friend of his who had just bought a

suburban office building. "You wouldn't happen to have some vacant space?" the lawyer

asked. "Say, 1,500 square feet with a little room to expand as we grow?"

The buinding owner had just what his friend was looking for, at a rent both agreed was

perfectly reasonable. "This is beautiful space for us," the lawyer announced. "You won't have

to do a thing to get it ready. In fact, I'll even get one of my secretaries to type up a lease for

you, free."

When the lawyer moved in, his landlord friend sent over flowers and champagne. A little

later, he asked -- apologetically -- whether the lease was finished yet. "Well, with the move

and everything, we're a bit behind in our paperwork," the lawyer admitted. "But it's all

standard stuff."

Then the arguments began. Taxes went up, and the building owner insisted he had a right to

pass the increase on to the new tenant. The lawyer installed new locks, and sent the bill to

the landlord, who sent it back. The lawyer complained that the building wasn't heated at

night, when he sometimes saw clients. And finally, a karate studio moved in directly over the

lawyer's officer, punctuating each day with muffled shrieks and crashes.

The lawyer and his landlord friend have learned one lesson: Never take a commercial lease

for granted. A lease is usually one of the largest contracts an independent business owner

ever signs. A single paragraph of ambiguous language can create years of irritation and even

lawsuits.

As a real estate broker who often deals with smaller offices and retail businesses, I've taken

part in hundreds of bargaining sessions between building owners and prospective tenants. I

find there are 10 important points to negotiate carefully before you sign the lease:

1. How long will the lease run? When I first started working as a borker, most landlords tried

to pin down tenants to the longest leases they could get, to keep vacancies to a minimum.

Now, however, tenants are usually the ones who want long leases, as a hedge against

inflation. In almost every major city, empty space is at a premium -- and rents are rising fast.

For example, the new owners of a office tower just announced that they expect to see their

average rents rise from $18 a square foot today to $60 a square foot within only five years.

Typically, commercial leases run anywhere from 3 to 10 years, and the term is usually

negotiable with the landlord. But it's as important to pin down when the lease will begin as to

determine when it will end. Unless the space you agree to occupy is already vacant and

remodeled to fit your needs exactly, all kinds of last-minute problems can occur. An old

tenant refuses to move out; construction isn't finished on schedule; disagreements arise

about whether you can gain early access to install fixtures and make your own

improvements.

Your lease should clearly spell out what happens if the space isn't ready by the move-in date,

and what adjustments in rent will be made by the landlord. Be wary of a clause that allows

the landlord to provide you with "alternative" space if the new premises aren't ready on

time. That remedy only compounds the problems and costs of moving. If you have any

doubts about whether your new space will be ready on time, give yourself some leeway in

moving out of your old premises. Otherwise you may find yourself operating out of a moving

van while lawyers squabble over the find print.

2. How much is the rent? Rent, unlike almost any other cost of doing business, is a fairly

inflexible part of your overhead. But making cost comparisons when you're looking for rental

space can be tricky.

Commercial rents are generally measured by the annual cost per square foot of the space

(see "How Much Space Are You Really Renting?" below), but there are at least five common

ways to calculate rent, every one of which uses square footage as the basis for comparisons.

* Gross leases, once the most common standard for office space, simply require the tenant to

pay a flat monthly amount; the landlord is responsible for all the expenses of operating the

building, including taxes, insurance, and repairs. (Because of rising energy costs, many

landlords now charge tenants separately for heat and electricity, which used to be part of

most gross rents.)

* Net leases require that tenants pay for some or all of the real estate taxes on a property, in

addition to a base rent.

* Net-net leases go a step further: Besides base rent and taxes, the tenant pays for insurance

on the space he occupies.

* Net-net-net, or "triple net," leases, which are usually written only for industrial properties,

effectively pass on all the costs of operating the building, including repairs and maintenance.

* Percentage leases, finally, are a special type of rental arrangement that applies to retailers,

especially in multipletenant malls or shopping centers. In a percentage lease, the tenant pays

a fixed rate plus a percentage of gross income.

3. How much will the rent go up? Not very long ago, the costs of operating a building --

particularly real estate taxes and energy costs -- rose so slowly that an owner could catch up

simply by raising his rents every time a new tenant moved in or when a lease expired and was

renewed. Now, however, costs are so unpredictable that most landlords feel they need some

protection in the form of escalation clauses, during the course of even a short lease.

One common type of escalation clause builds in regular step-ups in rent over the course of

the lease; others pass on prorated increases in taxes, heat, maintenance, and other direct

costs. Another common escalation clause automatically raises rents according to the

Consumer Price Index, or some comparable index of inflation. (Since the CPI generally

overstates the impact of inflation, a tenant shouldn't agree to pay more than a portion of the

annual CPI increase, especially if the lease already contains escalators for taxes and direct

operating costs.)

Most landlords will negotiate the key elements in the escalation clause, including the base

year. If you move in halfway through the local fiscal tax year, for example, your base year for

taxes could be any of three years -- the previous tax year, the present year, or even the next

full year. The same holds true for heating costs and other elements of the owner's overhead.

In particular, you should be careful about the base year if you move into a new building that

may take a year or two to reach full capacity, since the owner won't have a stable history of

operating costs to use as a reasonable base.

4. Can you sublease? Two years into a five-year lease, you discover your company is bursting

at the seams and it's time to find a new home. What happens next may depend on a rather

delicate negotiation with your landlord over what kind of subleasing he considers

"reasonable."

5. Can you renew? Once your present lease expires, a landlord has no legal obligation to

offer the same (or other) space to you. Unless you've agreed on a renewal formula and have

a clause that guarantees you'll get first rights to the space when your lease expires, you'll

probably end up paying the prevailing market rate to stay on.

Normally, a tenant has to give written notice exercising his option to renew his lease, or it

lapses automatically. (A year's notice is typical for long-term leases, while only three or four

months might be standard for shorter-term leases.) Some leases, however, are renewed

automatically until you take steps to cancel them. This can be a handy arrangement for

companies with several branch locations, that don't want to risk having their leases run out

by accident.

6. What happens if your landlord goes broke? A few years ago, a doctor I know moved into a

small, privately owned medical building and spent a fortune on renovations and built-in

equipment. One morning a bank officer -- "a real shark" -- showed up and announced that

the doctor's 10-year lease was void, because the bank had foreclosed on the building. The

doctor could stay at twice his original rent, or move within 30 days.

The doctor could have protected himself either by making sure his lease contained a standard

"recognition" or non-disturbance clause. If a landlord balks on this point, it may be that he's

on shaky financial ground.

7. Who's responsible for insurance? In the rush to firm up a lease, insurance rarely gets the

attention it deserves. The result is that many buildings -- especially those with multiple

tenants -- are covered by a hodgepodge of overlapping and inadequate coverage. This is not

only costly, it also invites disaster. In case of fire or other major disaster to the building, it

may take years before the various insurance companies manage to sort out the claims and

decide what was and was not covered.

Landlords in general are elxpected to carry a comprehensive policy on the building that

covers liability for common areas, such as lobbies, stairways, and elevators, and provides

casualty protection for the building itself. They also have the right to insist that tenants carry

their own insurance to protect the landlord against claims that might arise from the conduct

of their businesses (a visitor who trips on an office carpet, for example), and "contents and

improvements" coverage that protects his investment in the property itself.

Making sure the policies dovetail, though, is really a job for a professional insurance agent or

a lawyer with expertise in insurance. He should be able to review the building owner's

policies, help close any dangerous gaps, and spot unnecessary expenses.

8. What building services do you get? Just about the only way a landlord squeezed by

inflation can cut his costs is by lowering thermostats and reducing maintenance. It's a good

idea, therefore, to define in writing precisely what services you're entitled to get as part of

your lease. Some key points:

* Electricity is often supplied as part of the building services you get, but a landlord may

reasonably set limits if you expect to install electrical machinery or extra air conditioning.

* Heating, ventilation, and air conditioning (HVAC) are also usually the landlord's

responsibility. Unlike apartment buildings, though, commercial space rarely offers 24-hour

HVAC service. You should attach an HVAC schedule to the lease itself, and even specify what

service is to be provided on state and federal holidays. (Normal HVAC service is usually

available Monday through Friday, from 8:00 a.m. to 5:00 p.m., and Saturday from 8:00 a.m.

to 1:00 p.m.)

* Cleaning services can make a big difference in the appearance your company presents to

the public, so you should request a specific schedule of how often the building will be

cleaned, and who is responsible for such house-keeping details as cleaning your restrooms

and taking out the trash.

9. Who else can move in? How would you feel if a close competitor moved in next door?Or a

business that generated strange odors or loud noises?Or one that attracted unsavory people?

To some degree, zoning laws protect businesses from "incompatible" uses, such as retail

businesses in office buildings, or manufacturing in a retail neighborhood. But you can also

negotiate stricter limits with your landlord if you feel it's necessary.

Just remember -- if you need to sublease, those strict requirements may give your landlord a

reason to reject a tenant you want to turn your space over to.

10. Who pays for improvements? Modern office buildings generally provide allowances for

improvements -- new partitioning, lighting, carpets, paint, etc. -- but there still remain wide

variations in what individual tenants feel they need, and what individual landlords are willing

to provide. No other area of a lease, in fact, is so open to negotiation and hard bargaining

between landlord and tenant.

IV. Renting commercial property: tips

Looking for that perfect commercial space to rent for your business can be daunting, not to

mention time-consuming. Plus, signing a lease agreement is not without risk. To make sure

you find the best space for your new business venture and maximise on your lease

agreement rights, consider the following:

Know your needs

Found a nice area and spot for your new shop/business location? From here on, you need to

do right away – and complete well – your homework! Know the rates and what the rentals

are like on the premises you wish to operate your new business.

Don’t forget the specifics: ask for the cost per square metre and compare costs before

deciding on finally coming up with a lease agreement.

Doing your homework also means knowing your needs. Exactly what space do you need and

how will it make the operations of your business smooth and convenient? Are common areas

such as elevators, hallways and restrooms already included within the space you intend to

rent? If not, are these common areas conveniently accessible to and from your prospective

rental space?

Understand how the landlord also measures the space. Some measurement methods

employed by owners include wall thickness, so you must be aware of, if not familiar with, this

consideration. Another thing is to always take into account that commercial lease

agreements usually provide for and include a percentage-based rental increase annually.

Being clear with your needs and how they are met (or not) by your prospective rental spaces

and landlords makes it easier for you to trim down your list of choices and settle with the

best option that fits your financial situation and your business needs.

Know about location

Eight Mile Plains (4113) is a suburb of Brisbane, Southern Suburbs, Queensland. It is about 13

kms from QLD's capital city of Brisbane. Eight Mile Plains is in the federal electorates of

Bonner, Moreton.

In the 2011 census the population of Eight Mile Plains was 13,379 and is comprised of

approximately 50.3% females and 49.7% males.

The median/average age of the population of Eight Mile Plains is 32 years of age.

48.0% of people living in the suburb of Eight Mile Plains were born in Australia. The other top

responses for country of birth were 7.5% China , 5.9% Korea, Republic of , 4.3% Taiwan, 4.1%

New Zealand, 3.7% India, 2.3% England, 2.2% Hong Kong , 1.9% Malaysia, 1.5% Vietnam, 1.4%

South Africa, 1.1% Fiji, 1.0% Papua New Guinea, 0.9% Indonesia, 0.7% Philippines.

52.0% of people living in Eight Mile Plains speak English only. The other top languages spoken

are 11.9% Mandarin, 6.6% Korean, 6.5% Cantonese, 3.2% Language spoken at home not

stated, 2.5% Other, 1.6% Punjabi, 1.6% Greek, 1.6% Vietnamese, 1.4% Other.

The religious makeup of Eight Mile Plains is 22.2% No religion, 19.6% Catholic, 9.1% Anglican,

6.9% Religious affiliation not stated, 6.5% Buddhism, 4.8% Uniting Church, 3.8% Presbyterian

and Reformed, 3.6% Christian, nfd, 3.5% Islam, 3.5% Eastern Orthodox.

51.6% of people are married, 37.0% have never married and 5.9% are divorced and 1.8% are

separated. There are 404 widowed people living in Eight Mile Plains.

58.4% of the people living in Eight Mile Plains over the age of 15 and who identify as being in

the labour force are employed full time, 29.8% are working on a part time basis. Eight Mile

Plains has an unemployment rate of 6.8%.

The main occupations of people living in Eight Mile Plains are 26.8% Professionals, 16.8%

Clerical & administrative workers, 12.3% Technicians & trades workers, 11.6% Managers,

9.4% Sales workers, 8.7% Labourers, 8.0% Community & personal service workers, 4.6%

Machinery operators & drivers, 1.7% Occupation inadequately described/ Not stated.

The main industries people from Eight Mile Plains work in are 12.3% Health care and social

assistance, 10.2% Retail trade, 9.4% Professional, scientific and technical services, 8.6%

Accommodation and food services, 8.1% Education and training, 8.0% Manufacturing, 6.8%

Construction, 6.5% Public administration and safety, 5.1% Transport, postal and warehousing.

32.1% of homes are fully owned, and 33.1% are in the process of being purchased by home

loan mortgage. 32.5% of homes are rented.

The median individual income is $575 per week and the median household income is $1471

per week.

The median rent in Eight Mile Plains is $385 per week and the median mortgage repayment is

$2000 per month.

(Source: https://localstats.com.au/demographics/qld/brisbane/southern-suburbs/eight-mile-plains)

Review renting considerations

Your renting considerations should also include any or a combination of the following:

Market review information

Fixed percentage increase

Consumer price index increase

Make sure you are paying right and not paying too much. If still unsure about figures and the

annual rent increases you need to prepare for, consult with your trusted financial advisor

and/or accountant for the specifics and ask for guidance for you to finally decide on the best

commercial property to rent.

Understand terms of lease

Both short- and long-term lease agreements bring with them benefits and drawbacks. Along

with the security, a long-term lease gives you the ability to build up your new business and

mold it into an attractive asset.

Short-term lease arrangements enable you to decide whether you will renew your lease

agreement or move out to a bigger space if your business has considerably grown by the time

your original agreement expires. Thus, understanding the specific terms of a lease and

making sure most, if not all, of the things contained in the lease agreement bring benefits and

value to your new business is of utmost importance.

The following are lease terms and conditions you need to take into account:

Security of tenure for the agreed-upon and/or desired length of time

Rate of rent for the duration of the lease

Provisions contained in the contract that allow for convenience in your daily operations and

make sure that you do not face any additional financial burdens related to the leased space

Identify need(s) to fit out space

By this time, you already have a trimmed down list of prospective rental spaces, if not a final

decision on which commercial property to rent. The next thing you need to focus on is

whether the space you intend to transform into your shop or business location needs some

fitting out.

Of course, fitting out means expenditure so you must ask yourself, first, whether it does

require fitting out, and second, if it does, how much the total fit-out cost will be.

In some cases, the fit-out cost is shouldered by your landlord. If not, he or she may offer you

a lease incentive payment or rent-free period, or a combination of both, in assistance of the

fit-out expenditure. You may be able to customise your arrangement with your landlord

regarding the fit-out cost and plan depending on how well you negotiate.

If still unsure, always consult your financial advisor and/or lawyer with a proven expertise on

commercial lease agreements and contracts. They may also be able to give you tips on how

to productively negotiate with your landlord.

Estimate outgoings and operating expenses

If your lease agreement includes your landlord passing on the operating costs or outgoings to

you, or if he/she, too, is charging for these services separately, make sure you negotiate well

and come up with a fixed-free or amount cap included in the final agreement.

It is of utmost importance that you make sure your landlord declares and makes you aware of

all these expenses and costs before you finally decide and enter into a lease agreement with

him/her.

Set a realistic and convenient time frame

As noted above, both short- and long-term lease agreements have their respective pros and

cons. Of course, most landlords would prefer you enter with them into a long-term lease

agreement, for obvious financial and security reasons.

However, if you think a short-term lease is more appropriate and more convenient for you,

then inform your landlord of said preference and negotiate with him or her until you come

up with a mutually agreed upon arrangement.

The great thing about short-term leases is the freedom they allow you whether to renew the

same agreement, revise it once it expires and then renew, or not renew it at all and look for

another space – all, of course, depending on which you think is the best course of action to

take for your growing business.

Take note of the little things

The little things matter in finalising your lease agreement. Make sure your agreement

includes in its contents full permission to allow for signs you will put up to be visible from and

along the street(s), not prohibit those signs. Make sure you and your landlord, as contained in

the agreement, understand and are certain who takes care of the taxes, insurance

obligations, and even the council and water rates.

Remembering these little things and taking them seriously into account will not only help you

design a realistic budget plan but also bring you peace of mind because, simply, you’ve got

everything covered.

Maximise on your rights

Before finalising the agreement with your landlord, make sure your lease has a Right of

Assignment clause. This clause is important and useful as it allows you the option to transfer

the lease to a new tenant.

Other specifics that may be included in the terms which you should take into serious

consideration are: the option to renew the lease, the option to expand the current space,

details on how the lease is to be terminated and if there are penalties for premature/early

termination, and notice requirement(s), among others.

It is important that you negotiate well with your landlord and maximise on your rights in

coming up and finalising the lease agreement. Again, if still unclear or unsure how to

proceed, speak with and engage the professional services of your financial advisor,

accountant, and/or lawyer for a more informed and enlightened commercial space rental

decision.

V. What's Included in a Commercial Lease Agreement?

If you are looking for office space for your business, you'll be talking to commercial real

estate people. Like other professions, they throw out terms like everyone is supposed to

know what they are talking about.

To help you navigate the real estate jargon and terms you will see in a commercial lease, here

are some common office and commercial leasing terms and their general explanations. Some

of these terms may be used differently in various regions of the country, so be sure to ask the

precise meaning of a term when you are negotiating a lease.

Lessor

The lessor is the person who is granting the lease and who has the legal obligations related to

the lease contract; the landlord. Sometimes this is an owner, but it may also be a property

management company or commercial leasing company.

Lessee

The lessee is the person leasing the space; the tenant. Although you may need to personally

guarantee a lease, your business entity should be the official lessee on all documents relating

to the lease.

Common Area Maintenance (CAM)

This term describes costs for areas in a building that are not directly leased but which are a

common responsibility, such as hallways, restrooms, stairways, and walkways. Most lessors

add CAM costs to square footage costs to calculate lease payments.1

Fully Serviced Lease

A lease in which the rental payment includes other services, such as utilities, maintenance,

and lawn/snow removal services. The landlord pays these fees and passes them on to the

tenants in the lease. This can be a benefit to tenants as it saves from having to pay these

additional fees, but the landlord may be charging more than actually is being paid for these

services.

Gross Lease

A lease that includes the landlord agrees to pay for all common expenses, including utilities,

repairs, insurance and (occasionally) property taxes. The cost of a gross lease is higher than

for other types of leases because all of these items are included in the amount of the lease.2

Net Lease

A lease which includes the square footage costs, CAM costs, and all other ownership

expenses, including utilities, repairs, insurance, and property taxes.

Double Net Lease

A lease in which taxes and insurance expenses are included in the lease payment. The lessor

pays maintenance costs.

Triple Net Lease

A lease which includes all taxes, insurance, and maintenance costs in the monthly payment.

Gross Square Foot

The total square footage of the building or office being leased. This figure usually includes

common space.

HVAC

An abbreviation for 'heating, ventilating, and air conditioning.' It's often pronounced as "H-

VAC."

Build-out/Leasehold Improvements/Tenant Improvements

The improvements to the office or building to make it usable for the tenant. In accounting

terminology, these costs are called "leasehold improvements," and they can be depreciated

as expenses.

Turn-key

An office or building that is ready to occupy. In most cases, this is a commitment by the

landlord to bear the cost of any build-out.

Sub-lease

A sublease is an agreement between the lessor and lessee to allow someone else to use all or

part of the space. In some cases, a business may wish to have another business to share the

space - and the rent. In other cases, the tenant may want to leave before the lease term is

up, and to have someone else take over the lease, to avoid having to re-negotiate.

Common Sections in a Commercial Lease Agreement

Premises. The detail of the building or unit, including the address, condition. Most

commercial leases are made "as is," meaning that the lessee accepts the condition.

Lease term, usually expressed in months. This section includes both the date the lease is

effective and the date the lessee begins to occupy the space.

Rent and payment. There may be a base rate and a separate CAM rate. This section describes

when the rent is due, what happens if it's late,

Security deposit. This amount may be equal to the first month's rent, to be returned to the

lessee at the end,

Rent adjustment explains when the rent might be adjusted for taxes, cost of living increases,

or additional operating expenses.

Renewal option relates to how and when the tenant can renew the lease and any changes in

rent for the additional terms.

Common areas are defined and discussed, including the responsibilities of the management

and the lessee for management and control.

Utilities paid by the lessee are described, including what happens if the tenant doesn't pay

the utilities when they are due.

Use of Premises. How the lessee is using the premises, what activities are prohibited, and

nuisance issues are described.

Insurance. Lessor and lessee responsibility for insurance, and the amount of liability

insurance the lessee must prove.

Maintenance and repairs. Responsibility of the lessee and the landlord for maintaining the

premises and making repairs.

Improvements, Alterations, and Additions. The landlord must consent to any alterations or

additions, including initial improvements.

Subleasing. Most landlords do not allow subleasing unless it's by consent of the landlord.

Circumstances under which the lessee can assign or transfer the lease to someone else.

Landlord Access. When the landlord can have access to the premises, and how much notice

must be given.

Default. What conditions mean that the tenant has defaulted (broken) on the terms of the

lease, and what remedies the landlord has.

Termination. How the lease can be terminated by either lessee or lessor and what notice

must be given.

Consider all these things and look here for the best option available in Eight Mile Plains.

Ex: Retail Shop for Lease/Rent in Eight Mile Plains QLD

Property Description

- Area from 111m2 to 227m2 available

- Well located in heart of Eight Mile Plains

- Carpeted and air-conditioned throughout

- Office, reception and kitchenette

- Short distance to Pacific Highway, Logan Rd and Westfield Garden City

- Ample food services, cafes & businesses, including Australia Post

- Suited to professional users, medical specialist, IT, lawyers, accountants etc

Motivated landlord, contact Exclusive Agent Today! Visit here for further details:

https://www.commercialproperty2sell.com.au/details/office-with-all-retail-convenience.php

VI. Negotiating A Commercial Lease? Here's What You Need To Know

For many entrepreneurs signing a lease seems like renting an apartment – a Tennant/Lessee

agrees to pay a certain fee to Lessor/Agent per month. Right? Nothing could be further from

the truth.

The first lease many entrepreneurs sign is usually short-term because who knows if the

business is even going to work. But say it does and now it’s starting to grow -- you need a

new spot either for better location, better facility or larger space. The second lease you sign

is often pivotal in the survival of your business. The terms of your lease can act like a slow

leak in your tires or can leave the door open to incur huge expenses when the unexpected

happens. Leases are legal contracts and should be examined closely and, more importantly,

understood completely before you even consider signing one.

There are different types of commercial leases and a number of abbreviations that differ in

meaning and usage depending on who’s using them. When it comes to commercial leases,

there are several basic structures that equate to what the tenant is responsible for paying

besides rent each month:

There are many different commercial leases and terms, but you’ll find that the devil’s in the

details. Entrepreneurs probably sign more Modified Gross Leases than any other. Here are

some examples to watch out for to help you avoid becoming another one of the countless

businesses lost to unforeseen issues related to commercial real estate. There is probably no

better place to look for these real estate lease examples tripping up entrepreneurs. CPA and

award-winning author Mike Bivona has owned numerous commercial rental properties. He

told me about a particular building he owned in which one of the tenants had a bathroom in

their office. Not totally uncommon, but after the owner had left for the day , someone

flushed a clogged toilet causing water damage down two floor levels. Guess who got stuck

with the cleanup and repair bills? The tenant whose toilet overflowed.

Bivona gave me another example. A doctor’s office tenant had a patient come in for his

checkup, parking his oil truck in the parking lot. The oil tank leaked oil into the drains, which

led to the Suffolk County sewage system. The whole building had to be shut down by the

county, while they cleaned the parking lot, drains, and the entire drainage system. Businesses

lost revenue and the whole cost of cleanup hit the medical office tenant. Bivona says, “As

soon as there is any dispute, claim or cost involved, the first thing the landlord or

management company is going to do is pull out the lease agreement. If you don’t know who’s

responsible for the damages in a lease, chances are it’s you.”

I know you’re probably thinking these things won’t happen to you; they’re extreme

examples. But not so fast. Real estate leases are a vital piece of any business’ costs, and there

are many risks. Leases are generally quoted in a price per square foot. Often lease

agreements can be recycled by landlords and may not be up to date with the actual space

due to remodeling, repairs or simple measurement errors. Incorrect measurements by

landlords due to error or intent are common enough that there’s a term for it—“rubber

rulers." The most common mistake entrepreneurs make is not verifying the space they are

renting. You could be vastly overpaying. The actual space you’re planning to use for your

business is referred to as the useable area, yet the rent in an agreement is based on the

rentable areas, which includes the useable area plus a percentage of common areas like

lobby, hallways, elevators, and loading docks. These other areas are generally expressed in

the calculation of your rent as a “multiplying factor” in addition to your useable space. Bivona

advises, “Don’t just automatically agree to a multiplying factor in a lease. If your business is a

one- to two-person operation with little traffic you may be able to get a lower multiplying

factor saving money to your bottom line. Depending on the terms and length of the lease,

this could add up to real money for an entrepreneur.”

Michael Siteman with M-Theory Group in Los Angeles told me that another common mistake

made when signing a lease involves operating expenses. No, not your company’s operating

expenses, but the operating expenses contained within the lease under a separate provision.

These are often made up of variables such as taxes, utilities, maintenance, landscaping, and

repairs. While this may seem common sense to you, you should not breeze over it. Siteman

advises to review this section thoroughly and he should know – he has spent more than 28

consecutive years in commercial real estate working for companies such as The Staubach

Company and Jones Lang LaSalle. Besides making sure to find out exactly what is included in

these operating expenses and negotiating out items that are not pertinent to your space, he

warns that “landlords use the term ‘base year’ for the operating expenses, and many times

the operating expenses or ‘base year’ is factored off of the year before you occupy the space,

so you shouldn’t pay operating expenses until the second year.”

Another nasty issue in commercial leases is the “escalation clause.” This is what increases the

base rent and unless your lease is short-term, it probably includes one. Escallation clauses are

both valid and very common and are used by landlords to pay for increases in the costs of the

building. But while they may be valid and common they are also one of the biggest possible

money traps for a tenant. When an aggressive landlord is paired with a naive tenant, an

escalation clause can increase rent exponentially over years. The Internet is full of stories of

this. As they say, a fool and his money are quickly parted. Michael Bivona also warns,

“Tenants have to be very careful with escalation clauses as they can be a very costly add on.

You know how crazy escalation clauses can be? What about increases in inflation indices?

There is no end to what landlords will do to increase their profits. Tenants should be sure to

negotiate a cap on this.”

Lease agreements can be as varied as rental spaces. In fact, there is really no standard format

for commercial leases other than retail and industrial, according to Siteman. You can get

copies of standard retail and industrial leases from The Association of Industrial Realtors or

AIR Commercial Real Estate Association.

These points are really just the tip of the iceberg when analyzing threats from and within real

estate leases. It may seem overwhelming even at this point, but remember, a commercial

lease is a legal contract between you and a landlordwho is interested in getting as much risk

off of themselves and onto to the renter - you. So do not simply rush through a lease

agreement like you did with your first apartment lease; it is a binding legal agreement. I

recommend involving a real estate attorney that specializes in property leases to help you

with this. Depending on how well you construct the terms of the lease, when something goes

wrong, such as an unforeseen accident or unexpected cost inflation, your commercial lease

can ultimately be a friend or an enemy to your business.

Conclusion

The above-mentioned tips will help you to make an informed decision over the choice of

investing in commercial property. It is important to know all the nuances and pitfalls of this

type of activity. With the help of a skilled and knowledgeable agent, an investor can make

his/her process easy. If you want to increase your capital, investing in commercial real estate

can be one of the best options. But it requires thorough research in regards to knowing the

overall cost in the acquisition of the property, the taxes involved, the zonal laws and laws for

renting out and the rental earning potential of that building or shop.

References:

Commercial Real Estate Property Leases| Thebalancecareers. Retrieved from 15 May, 2020

https://www.thebalancecareers.com/commercial-space-offers-fewer-restrictions-3515439

Questions To Ask Before You Sign A Lease| inc. Retrieved from 15 May, 2020

https://www.inc.com/magazine/19820401/267.html

Renting commercial property: tips| mybusiness. Retrieved from 15 May, 2020

https://www.mybusiness.com.au/management/3799-renting-commercial-property-tips

What's Included in a Commercial Lease Agreement?| Thebalancesmb. Retrieved from 15

May, 2020

https://www.thebalancesmb.com/common-commercial-leasing-terms-explained-398067

Negotiating A Commercial Lease? Here's What You Need To Know| Forbes. Retrieved from 15

May, 2020

https://www.forbes.com/sites/groupthink/2015/06/02/negotiating-a-commercial-lease-

heres-what-you-need-to-know/