Negotiating lease terms with a commercial landlord can be an intimidating prospect for any business owner. For those new to the business of leasing commercial space, the process is more challenging than arranging residential leases. If you know what to look for, you can ensure that the terms are fair and consummate to your aims, budget and goals. There are many issues to consider, but here are the three most important issues.


Issue #1. The Type Of Space Being Rented

One of the most difficult aspects of finding good value commercial space is weighing up quotes. Commercial space can refer to either the rental square footage or the usable area. The latter of these two types of space will be less as it does not include common areas. For instance, the usable square footage of office space may not include access points, restrooms and space around the entrance. Therefore, it is critical for any business owner to carefully determine precisely what space is being included in the rental, and, more revealingly, what space is not. As a potential tenant, you must remain aware of how your employees may use the space.

Issue #2. The Projected Growth Of Your Business

If you are reading this, your business is likely in the emerging stages and you are planning to enter lease negotiations on your own. While a trusted realtor with experience of negotiating commercial leases can help you hammer down the best deal, even they will not be able to take account of how your business may grow. While longer leases are generally offered with more favorable terms to sweeten the deal, this will reduce your flexibility to respond as your business grows. For instance, you may need dramatically more space after the first year yet be contractually obliged to continue renting a commercial space that is too small to meet your needs. Business consultants can help you determine the expected growth of your business and you can use this data to determine the size of premises to lease and the most suitable lease length. Opting for a shorter lease with a number of renewal options may be more expensive than one long lease, but it may save you money as your business grows.

Issue #3. The Cap On Rent Escalations

In Toronto, most commercial space is leased with pre-agreed price escalations. Many landlords stipulate that the Consumer Price Index (CPI) will determine these periodic rises in rent price. Indeed, one of the benefits of signing a longer lease of ten years or more can be the chance to escape these rises in price. Signing longer leases can be incredibly tempting in the face of ongoing rent escalations found in shorter-term leases. As a business owner, you need top quality professional representation when looking for office space for lease in Toronto. Realtors may be able to help you negotiate a cap on rent escalations. This will ultimately help improve your cash flow and eliminate unplanned bills.

Conclusion There are many issues when negotiating a lease for commercial office space in Toronto but the three main issues discussed in the article are arguably the most crucial. Paying particular attention to these three areas will pay dividends when you begin your search.