Important Considerations Before Signing a Commercial Lease

Insurance Issues: In most commercial leasing situations you will need a general commercial liability insurance policy in place prior to moving in.  If you sign a lease and then find you cannot get insurance, you may still be stuck paying for the lease.

The minimum insurance protection most businesses need includes:

  1. General liability: which provides both defense costs and coverage for damages if your business, its employees or products or services cause or are alleged to have caused bodily injury or property damage to a 3rd party
  2. Property insurance: to insure equipment and furnishings
  3. Worker’s compensation:  which is required by state law to protect your employees if injured in the course of business

Property Maintenance:

Is the parking lot well maintained? Run-down parking lots not only will make your business seem less established but may also be an indication of an unresponsive landlord.  Is there adequate exterior lightning? Proper exterior lighting enhances security.

Is there ample parking? Seeing an empty parking lot during after-hours does not tell you anything about parking. The best way to know is to visit the parking lot on different days at different times.  A parking lot filled to capacity during normal business hours may be a good indication of steady customer traffic, but it may also mean your customers will have trouble parking.

Visibility to Your Customers:

Can the front of your business be seen from a main road? If not, is there street-visible signage advertising the business? If you are considering retail space or renting in a business park, does the property owner advertise on behalf of tenants to draw in traffic?

Advertising Restrictions:

Are there any city, county, or landlord restrictions on signs such as size, color, light intensity or location?  Do you have to use the landlord’s vendor to create or maintain your signs?

Accessibility for the Handicapped:

Are there enough parking spaces assigned for handicapped drivers?  Is the building and your unit handicapped accessible? The law in all fifty states requires there be sufficient designated parking for persons with handicaps.  If there are no such accommodations, ask why not, and if they are planned. If the landlord must make updates to the building or parking lot to comply with public access laws, your landlord may pass some of those renovation costs along to you!

Restrictions on Business Use:

Are there restrictions on how many customers you can have daily, or on your hours/days of business operation?  Do you have access to your business before or after normal business hours, and if so, are there any additional associated costs for heating, cooling, electricity or security?

Security Considerations:

Is there a 24-hour monitored alarm service or onsite guard? Are police and fire departments nearby? Where is the nearest fire hydrant? Are there sprinklers and smoke/fire alarms in the building?  These concerns not only affect you and your customer’s safety, but can also affect your ability to get insurance, the amount of coverage you can get, and your insurance rates.

Talk to at least one other tenant (preferably more). Ask if they have had a positive experience with the landlord or if they are aware of problems with the building or surrounding area businesses.