How to Read up on real estate terminology
Financial preparedness isn’t the only factor determining whether you can lease commercial space. Even if you think you’ve found a perfect location that you can afford, read the fine print before making a commitment.
For example, Bressman noted that a business owner should understand the differences among classes of commercial property (typically A, B and C) as well as the difference between “rentable” and “usable” space. Usable space is strictly the space you occupy and use for your business. You may be charged more for the shared costs of the full rentable space of the building.
“Many additional items are incorporated into the lease agreement, including real estate taxes, utilities, insurance, and maintenance and operating costs of the building,” Bressman said. “This can result in additional costs to the transaction [of] which business owners should be aware. In addition, the lease will need to include provisions for subletting, expansion and possible early termination.”
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Plenty of online resources, such as PropertyMetrics and 42Floors, can give you a basic overview of commercial real estate and help you understand what to expect.
Don’t try to do it on your own. Even if you take a DIY approach to running your business, think twice about going through the leasing process alone. While working with an experienced real estate broker or lawyer may be an expense upfront, it can help you avoid easy-to-make mistakes and negotiate better terms for your lease.
“Business owners, particularly founders of small companies, can … miss nuances and important terms in the documents, which is why a neutral, third-party advisor can help negotiate more favorable terms and know when and where to challenge existing offers,” Bressman said. “It’s also easy for business owners to get caught up in the way a space looks, rather than the terms of the lease, which can impact the space management, operations and financial obligation over the term of the lease.”