11+ Commercial Tenancy Agreement Examples
As the American people and the global economy waited in anticipation for the United States president’s trade policies to unfold in his first term, we said goodbye to the economic uncertainties of 2017.
Accountants scratched their heads in confusion trying to understand the implications of tax laws changes and Europe is starting to deal with Brexit’s realities. Meanwhile, the United States economy continues to show positive signs in many areas, including the real estate market. Overall, things are looking much better than the average American expected.
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The State of Commercial Real Estate
Experts says the average consumer’s purchasing confidence has seen a rise and unemployment rate reached a new low for the first time in 17 years. Last year’s 2.3% economic growth rate made the real estate industry look good in general, thanks to an increased consumer demand, especially in our busiest and fastest-growing cities, but the commercial real estate market has struggled to keep up and has been arguably on the brink of disruption since 2014. You may also see commercial agreement examples & samples.
Fortunately for the first quarter of 2018, the amount of National commercial real estate transactions exceeded expectations, marking a 4.7% increase, thanks to industrial deals, hotel acquisitions, and some off-market transactions.
Plus the fact that a new breed of investors and professionals wants to test their ability to lead and run businesses, which would naturally require commercial spaces.
The thing is, most of them have barely been out of college with only a few year’s experience in an industry and college debts to pay off. Or they already have experience but not in having their own company to manage and run, which means they may not have have the start-up cash required for opening a business. You may also like management agreement examples & samples.
If you’re one of them, this would bring you to renting an office space, as an alternative that far exceeds the advantages that purchasing a commercial property can give you.
However, commercial tenancy can also lead to paying exuberant fees and a storm of hidden charges, because the market is filled with people who have had years of experience with these transactions and they tend to be aggressive, especially to the new, young, and trusting investors of the trade, whether you’re the landlord or the tenant. You may also check out service agreement examples.
1. Commercial Tenancy
Renting an office space for the first time can be a good turning point especially if you’re trying a new business venture, or if you’re new in business itself. But choosing just any available space in your area would be a big mistake. Our advice is to begin the search once you have decided to move your business or open a new one. You may also see business agreement examples.
Having more time would mean also having a good leverage when you negotiate the terms of your commercial tenancy agreement with the landlord.
Commercial tenancy agreement defined is an agreement between a landlord and a business mapping out the terms and conditions of renting the property for commercial purposes. A commercial lease is targeted to renters who would use the space for business or other commercial purposes rather than residential use.
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Commercial Tenancy Tips
Before getting down to business and before thinking about any negotiating strategy, you need to ask yourself some basic questions. What can your budget afford? Where do you have to be—near consumers, public transportation, recreation centers, establishments, or is it more important to be near suppliers? How much space do you need? You have to break down all these factors before you get a deal signed. You may also see letter of agreement examples.
1. Decide if you really need an office space
There was a time not too long ago, when it was necessary for businesses to have offices so that they can survive. Today there are many entrepreneurs who are doing just fine working from home and some have even went on to rent or own co-working spaces. If the type of business you have can work in an alternative office environment, you can really save a lot of time, money, and effort. You may also like partnership agreement examples & samples.
2. Ask for quotes, get estimates
Asking for the rent fee and asking how the chargeable square footage is calculated should be the first part of covering your first bases, because it will help you determine what your budget can afford and whether or not you can work that budget around what your choices are charging. However, the only way you’ll be able to compare rates between your choices is by getting quotations or estimates from landlords. You may also check out what is a business agreement?
You can have one requested when you visit the landlord’s office or the agency they are tied with, for landlords who have realtors. Seeing a proper breakdown of the costs, especially when it comes to amenities you would be given or not given access to, would be a big help in your decision-making, not unless you’re okay with being handed the terms and conditions without having a clear idea of the financial responsibilities at your side of the deal. You might be interested in sales agreement samples.
3. Be ready to walk away
Only when you and your broker already have a shortlist of prospects in the area should you start with the negotiations for the first commercial space on your list. Be ready to walk away, and when you do, be sure to mean it. Sounds a tad dramatic? So would your regrets be, if this ends up as a very bad experience altogether. You may also see business agreement letter examples.
You should let your broker do the talking, because that’s what they’re being paid for, and if you’re lucky, you may end up with one who can give you a list of properties for lease that fits your needs and your budget. If you’re luckier still, you can find a broker who would be able to negotiate an agreement by using a list of prospects so that one of the landlords will be pressed to offer a deal that would be more than you can expect to have. You may also like contractor agreement examples.
4. Location is important
It always is. Location is another factor to consider when renting an office space since it could affect the nearby amenities that a business may need. Most likely, your staff would appreciate an office that would at least be near to coffee shops and dining places, malls, and transportation hubs. You’ll also want a property that’s near where you would have to visit for business purposes and transactions such as banks and meeting spaces. You may also check out printable agreement examples.
5. Be realistic and have a strict budget in mind
After location, cost would most likely be your next big concern, but trying to check a space with a nice view of Times Square and the Empire State Building, complete with a high-end design and state-of-the-art furniture with no more than a thousand dollar budget for monthly rent would be an elusive dream. Don’t push it. Choosing an office that’s going to put your business half to debt would stunt its growth before it even began. You might be interested in simple agreement letter examples.
Learn to crunch the figures before you even do your legwork and go looking for a budget which would let you have a good, comfortable start.
6. Make sure the lease is clear
The fine print can give you a headache, when you see the terms and conditions and what’s included in renting your first office space, but not reading and understanding it can lead to major trouble and ugly disputes, which would be the last things you need if you want your business to develop a good reputation in the area. You may also see agreement letter for payment examples.
You have to make sure that the provisions are clearly stated and not just take your landlord’s word for equipment, repair costs that aren’t included but would be charged later on since it may not have been officially stated in your general agreement. In order to have a better idea about your tenancy agreement, here are some of the terms that are typically included:
- Competition. This means that the landlord is restricted to rent a space near yours to businesses that are similar to the current tenant. Usually, this clause is included in retail space agreements.
- Destruction or condemnation. The landlord has the responsibility to rebuild if the property is damaged or destroyed. This clause specifies whether the rent will be abated and whether or not the tenant will be able to terminate the agreement if the property is completely or partially destroyed. It also needs to specify both parties’ rights in the event that the property is taken by eminent domain. You may also like purchase agreement examples.
- Enforcement. Specifies how the agreement is to be enforced and who pays attorney fees. Many businesses negotiate a clause into leases requiring the parties to resolve any disputes through either mediation or arbitration.
- Escalation clause. Most commercial leases contain this clause and it ideally specifies how the increase is determined. Is it keyed to actual increases in the landlord’s operating costs or to some outside index? You need to make sure this is clearly defined as it provides for increases in rent over a specified period of time. You may also check out roommate agreement examples.
- Insurance and liability. Specifies who is responsible for casualty and liability insurance and the coverage they require.
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There are more clauses and provisions that should be included in your tenancy terms and conditions such as repair and maintenance costs, improvements, option to renew or purchase, etc. It is important that you read the fine print well or get an expert to explain the terms to you before you sign the contract so that you can make any negotiations that will be well within your rights as a tenant. You may also see agreement examples.
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