Lease and Operate a Commercial Property
More businesses are considering leasing and operating a commercial property because it is cost effective and easier than the commitment required to buy, build and maintain a property. If you are looking to lease and operate a commercial property, understanding the advantages and potential pitfalls can play a major role in the successful management of it.
Advantages
The first advantage of leasing and operating a commercial property is that it is generally much cheaper than buying a property outright. Instead of paying for the entire property up-front, a business only pays for the use of the property on a month-to-month basis. This allows businesses to save up money they would have otherwise spent to purchase a property in order to use those funds for other parts of their development.
Additionally, leasing a property often allows businesses to operate in better quality spaces than could be afforded through ownership. For businesses on shoestring budgets, leasing a property with stable tenants may be the only way to access better quality locations.
Finally, businesses who lease a commercial property are able to access a range of services that come with the property. This includes all services associated with the maintenance of the property (e.g. landscaping, household repairs and so on) as well as access to technologies that support the day-to-day running of the business.
Pitfalls
Lease and operating a commercial property comes with a range of potential pitfalls. The first of these is the fact that a business may find itself in situations where the landlord is difficult to reach and unwilling to address any problems promptly. When dealing with a landlord, it is important to keep a record of all calls, correspondence and other interactions. This way, if disputes arise, then the business has a documented timeline of events which can easily be referenced.
Secondly, as a business is not the owner of the property they are unable to make major changes and renovations to the space. This can be problematic for businesses who require certain modifications to the space in order to operate. Any need for such modifications should be discussed with the landlord prior to entering into the lease agreement.
Finally, businesses must be aware of the potential for rent increases. While the amount of the lease is agreed upon up-front, landlords typically have the ability to increase lease payments as well as the terms of the lease (i.e. number of months). As such, businesses should expect that their lease agreement will be subject to changes which could increase their costs in the long-term.
Conclusion
Leasing and operating a commercial property can be very advantageous to businesses of all sizes. However, businesses should ensure that they understand the implications of the lease agreement before signing it. By familiarizing themselves with the advantages and potential pitfalls of the lease, businesses can ensure that they are making the most of their commercial property and minimizing the risks associated with it.
