Retail sales are growing year over year. In the United States, sales totals amounted to $4.94 trillion in 2022, a 7% growth over 2021. With statistics like these, it's no wonder that so many consider opening their own business the pinnacle of the American Dream.
For every retail store, there's a piece of commercial property owned by a savvy real estate investor. Where do you get started when you have a retail space for rent, and you don't have experience negotiating commercial leases? Read on to get started on your journey to real estate investment success!
Know Your Triple Net Leases
Commercial leases are more complicated than residential leases, and they require a certain level of negotiation to find favorable terms for all parties. One of the most common types of commercial leases you'll negotiate is known as a triple net lease.
Triple net leases require tenants to pay rent plus payments on three "nets":
- Property taxes
- Common area maintenance
- Building insurance
These leases are different from residential leases because tenants take on all of the property expenses except for structural components.
Define the Use of the Property
Commercial property owners should strongly consider whether they want to prohibit specific uses of their property. You'll want to make sure that you prohibit illegal activity, residential use, and any use of the building that violates local zoning codes.
You may also want to be specific about the types of retail establishments permissible in your rental agreement. For example, you may be fine with a clothing store in your building, but not a restaurant.
Lease Terms and Payments
Your commercial lease should also include information about the length of the lease term and how the lease renews or ends. For example, what happens if your tenant's business goes under and they need to terminate it early? Does the lease renew automatically, or do you have to renegotiate the lease?
Be specific about the rent amount, due date, and whether your renter should pay through a payment portal or send you a check. Don't forget to include information about late payment penalties and eviction terms.
Remodeling and Maintenance Responsibilities
Most businesses remodel spaces to make them fit their business. You can use your commercial lease agreement to place limitations on remodels. It can also have a provision that the tenant returns the space to its original condition at the end of the lease.
Finally, be specific about every maintenance responsibility that belongs to the tenant and the property owner.
Do You Have a Retail Space for Rent?
Seeing a business thrive in your retail space for rent is incredibly rewarding. In order for that to happen, you first need to draft a commercial lease that clearly defines the responsibilities of each party. You won't regret taking the time to ensure that you have a solid lease agreement in place!
Are you on the hunt for a property management company with expert levels of experience in the Vienna, Virginia area? Look no further! Contact PMI Smart Choice for assistance with everything from locating investment properties to commercial property management.
