A commercial lease is a rental agreement between a business and a landlord. There are many more factors at play in commercial leases which makes it more complicated than residential leases, but our real estate lawyer on Long Island can guide you through the whole process.
How do I lease out commercial real estate on Long Island?
1 – Set Commercial Real Estate Parameters
The first thing you want to do is set your property parameters. There is a wide range of commercial properties for all different kinds of business. You will want to understand and consider the variances to make the right selection for your needs:
- Ideal customer (employee pool): If you’re a business looking to attract visitors to your location, — restaurants, retail locations, and similar companies — then understanding your ideal customer will be the most critical parameter for you.
- Property size and zoning: Commercial properties are zoned for a specific use, and it’s crucial to understand this. They include industrial, office, leisure, restaurant, and retail. For example, if you’re a restaurant, you cannot lease space zoned for retail.
- Maximum budget: You want to find a commercial space within your monthly budget, therefore understanding your budget will help you limit your search to only properties you can afford.
- Desired size: For example, retail locations usually require 15 square feet per customer. You want to multiply this number by the number of customers you expect to have to determine the size you will need for your commercial space.
- Accessibility: This is especially important for retail and restaurants — ex. parking for your customers; think about locations with a high amount of foot and vehicle traffic.
2 – Find a Commercial Real Estate Broker
A majority of commercial real estate leases are done by brokers, are they can be broken down into:
- Leasing/listing agent — represents landlords
- Tenant broker — represents tenants
A landlord hires a listing agent when he/she wants to list their commercial property. They earn commission which is paid by the landlord — usually 3-6% of the total lease; tenant brokers earn tenant broker’s fees. Listing agents always act in the best interests of the landlord, whereas that’s not the case with tenant brokers — instead, they may act as an objective third-party.
3 – Understand the Different Types of Commercial Leases
Commercial leases can be broken down into three types differing solely on the way costs and fees are assessed. These three types are:
- Full-service lease: This is the most common type for office buildings with rent being all-inclusive meaning the landlord is responsible for paying the expenses associated with the property.
- Net lease: The landlord charges a lower annual rent when compared to a full-service lease, but can include monthly “usual costs” such as property taxes.
- Modified gross lease: This is a compromise of both the full and net lease.
- Identify the Right Commercial Property
Assess these in addition to property parameters:
- Location
- Amenities and services
- History of the landlord
- Anchor tenants
4 – Negotiate Commercial Lease Terms
Once you’ve gone through steps one through four, it’s time to negotiate the leases. When you are negotiating, you will write a business letter of intent that represents your offer — this is where you want to sell yourself; why would you be the perfect tenant? Our real estate lawyer on Long Island can help you with this.
Leasing commercial real estate can take some time, but our real estate lawyer on Long Island can assist you through the whole process. With the different types of leases and options for commercial spaces, it can be difficult to get your head around which way to go. Schedule an appointment with Joan Agostino today if you need help when it comes to commercial real estate.
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Company Name
Joan Agostino PC
Service Offered
Commercial Real Estate
Area Served
Nassau County