Renting a commercial or industrial property and moving a business or business to a new location should be an enjoyable and exciting new journey into the future. The commercial lease is often perceived as complex by the owner/tenant/tenant of the business. This article is intended to provide them with a basic introduction to commercial leasing and help in managing their change of location.
Basics of commercial rent comparison.
When comparing commercial property for rent, it is important to compare total costs. Find out what is included in the advertised price. Many agents advertise a net rent per square metre, so many potential tenants use this rate to compare.
The problem is that some properties are advertised for example as gross rents. These rents typically include many (but not all) of the items listed below. Gross rents are much closer to total cost and provide a better basis for comparing commercial rents.
It is difficult to calculate a gross rent backwards into a net rent. Instead, it’s more common to add extra costs to a net rent, making it an equivalent gross rent to compare with other commercial properties you might be shortlisting.
If the advertised price is net rent, just ask the landlord/agent for a cost breakdown below. You can then calculate the total cost and also the gross rent.
In order to compare the total cost of commercial properties for rent, the following costs should be identified;
I. GST (tax).
ii. Expenses, both fixed and variable,
iii. parking spaces,
v. license fees (if applicable),
vi. Amount of the bank guarantee,
vii. Legal Fees,
viii, management fees (if any), and,
ix. Deposit amount.
Sometimes location, your budget, architecture, timing, parking, and many other factors can affect your decision beyond price alone. If so, you need to focus on the remaining two subtitles.
Seek advice from an independent professional.
As with any legal document (the lease), we encourage you to seek independent professional advice. you are encouraged to research against an offer to rent or sign a lease.
1. Your accountant regarding tax implications and providing your business history to support any commercial property application. A certificate of incorporation and the coordinates of the administrators must also be provided if the lease is in the name of a legal entity.
2. Contact the local government authority to determine; A Current use and your proposed permitted use of the property and any parking requirements with the planning department, and B Any additional government agencies such as the health department and/or liquor licenses that may specifically relate to your business, such as a cafe, restaurant, or liquor retail to name a few.
3. Your lawyer regarding items such as the terms and conditions of the lease, the offer to lease, any specific details related to your business, before the offer you wish to make and before the signing of the final lease.
Pay attention to the last formalities listed below. They are often overlooked by the lessee/tenant. They cause delays just before the scheduled start date, causing them frustration as keys and access cannot be provided.
A. Return and sign all copies of the lease (rough) on/before the proposed start/access date,
B. Provision of the original bank guarantee (make sure you have the correct owner’s name) and,
C. Identification of all directors, provision of certificate of incorporation and directors, if applicable.
Without the above, no rental agreement legally exists and this is why keys and access to the property cannot be provided.
Leasing commercial, retail or industrial properties makes economic sense for many businesses. The down payment associated with the property can be diverted and invested in the business of the tenant/tenant and facilitate any expansion, move or installation in new premises.