Leasing a commercial space | Is it the right choice for business?

The ever evolving market trends and the ways of doing business in an economical way have coined the term commercial leasing. But first we must know, what defines a commercial property, the answer is as simple as a riddle, it is a space that is within a real estate & is being used for business activities to generate revenues.
Commercial property may include functions of large malls, corporate offices, and hospitality as well. It won’t be wrong to say, Commercial or Residential, real estate industry attracts NRI investment, which has widened its scope over the years.x`

What is Commercial Leasing?
Given the challenges for business these days, leasing a commercial space seem to be an economical and rational approach. Simply put, commercial leasing is renting out a space to conduct business operations with a mutual agreement. These mutual agreements comprising of array of unique terms and conditions defining the ownership of tasks and duties, is known as Commercial Lease. It is also referred to as long term duration lease and cannot be cancelled by the tenant/lessee or owner/lessor only at the discretion. Commercial lease is quite a complex document which covers or should cover all the trivial aspects from lessor’s and lessee’s perspective.
As an investor, it is suggested to check all the merits and demerits of the commercial lease before the start of the operations to avoid taking any wrong decision. So let’s talk about the advantages, why leasing a commercial property might be useful.

From lessor’s point of view:
1. Leasing has the economic growth potential that is recession-proof and can be maintained while the other businesses are not in good shape. Courtesy to the constantly increasing demand of office leasing as a cost-efficient way of financing. 2. Leasing not only helps in continuous income but also the owner enjoys the benefits of capital appreciation as the price of the property continues to rise over the time. 3. Also the lessor has the benefit of gaining the salvage value of the property. Salvage value is the price of the property after considering the depreciation of over the years. 4. Leasing a commercial property leads to quicker returns on investment as the rental income starts immediately after finalizing the deal unlike other options which are time consuming. 5. Even though the risk of maintaining the property and other liabilities are being transferred to the lesse through the lease, the ownership rights of the property still stays with the original owner that is the lessor. So depending upon the terms and conditions of the lease, the lessor may have the option of selling the property after the completion of the lease.

From lesse’s point of view:
1. Leasing a commercial property to run your business is a very healthy and cost-effective way to enjoy the gains without having to invest in the property from the beginning. 2. It reduces the risk of losing the capital investment while the same can be utilized in other operations of the business to focus on the smooth functioning rather than making huge investments beforehand. 3. Leasing a property also gives you the rights of possession that means maintaining and designing the property as per the choice, which is a very good incentive as one can design the surroundings as per the business’s specific requirements, for e.g. an advertising agency would need a peppy and lively environment to inspire the creativity and energy in its employees. 4. Since leasing a commercial is an economical approach, one of the main benefit could be, the one can start working at the most elite and strong location without having to worry about buying an office in that area that is now being called as a hub (IT hub, Retail hub etc) 5. Lesse also enjoys the benefits of tax deduction since he/she doesn’t own the place and can avail several benefits under tax regimes by showing rentals, which also adds to the revenue of the business indirectly. 6. Lesse also doesn’t have to worry about the change in the rentals even if there is an overall increase in the rentals of the location, as, after finalizing the commercial lease the rental is locked for few years and cannot be changed during the tenure.

Is it the right choice for the business?
Since every coin has two sides there are certain demerits as well but on the whole leasing a commercial property is never a wrong choice provided the lease agreement is thoroughly prepared and the interests of all the parties involved is kept intact with utmost transparency and fairness.
It is always suggested to take legal assistance before making the lease decision as it is known to be a document that contains all the intricacies regarding the agreement that is going to in effect for a long time. Otherwise the overall trend of leasing a commercial property has proven that the option always lead to gains.

Top 7 Key Factors to consider while leasing a Commercial Property

Before negotiating a commercial lease, it is critical to evaluate your business necessities and pick out the cutting-edge and the future area need and desires. Additionally, also determine your budget, and desired location, hence the landlords. Connect to a couple of service vendors inside the arcade due to the fact various alternatives lend you an advanced part and give you the capacity to walk far from any stalled negotiations.

Following are the top 7 factors to consider when leasing a commercial property!


1. Think before you click!

Locating the proper location for your enterprise might be a time-consuming, demanding process. Must have a look at as many properties as possible, and be open-hearted to a range of locations! The right vicinity in your enterprise can be a make-or-ruin proposition so you want to make sure you take some time to do it effectively. Withstand the urge to settle for a much less-than-superior building just to get the technique over with. Moreover, you can choose a building that is close to your vendors and suppliers to cut transportation costs. It is very important to select a commercial property to lease where there are various major landmarks, and obviously where your customers can reach you easily! Additionally, in case you ever find yourself equipped to sign a rent – don’t! Take an additional day, suppose it over!

2. Take assistance from the best!

Having an agent experienced in business real property is critical, not only to help you find an area but more importantly, to recommend you on the rent negotiations. this will be grueling and pricey in case you don’t have revel into your nook. As an instance, are you an ‘A’ or ‘B’ elegance tenant? Are you eligible for leasehold improvement incentives? Your agent assists you to navigate the offer!  

3. Flexibility to make changes

When leasing industrial assets, don't forget if there may be the ability to make modifications. Business leases commonly remain from five to twenty years. There comes a time when your business has grown, and also you need to make changes or upgrades to the building. Earlier than leasing the assets, ask the landlord if they allow changes to the construction as your enterprise grows. Inquire about the adjustments the owner can approve and what they do not approve so that when that time comes that you can make the changes, the landlord will now not deny their approval and crowning glory. it is essential to lease a business asset that the owner lets in you to make changes that suit your business desires at that point!

4. Tenant improvements

Whilst moving to a brand-new business building, you would possibly need to make adjustments that suit your enterprise necessities. it's miles vital to negotiate the tenant’s upgrades fees before you devote yourself to hiring the industrial area. You do not desire to get caught in a place you could make use of most for your needs. You want to look at the condition of the construction and decide the tenant enhancements you want to make. earlier than you lease the building, you need to believe the landowner on how tons manipulation you have got over the tenant enhancements and who will pay for them.

5. Do your homework!

You can discover the proper location is truly no longer as best as you think it is, whilst higher houses – and better fees – may be in a vicinity you had now not formerly considered. Study the local actual property marketplace so that you will have a rough idea of what an honest business condominium rate seems like in your region. Whilst leasing an industrial area, you should not forget its rent. Inquire from the landowner to realize the rent details earlier than you rent the distance. If space wishes some renovations to suit your enterprise needs, the landowner would possibly give you a grace period before you can start paying the rent to finish the upkeep. It'll help if you ask your landlords how lengthy you'll continue paying the lease after your hire ends. Some landlords require tenants to take away modifications to the construction and repair it to how they found it before beginning their lease. It's miles crucial to ask the landlord to make clear if you may continue paying hire until you complete making adjustments to the building after your rental period.

6. Period of lease

Before you commit yourself to signal the hire settlement, you must not forget the period of the lease you need. In case you are starting an enterprise, you might not realize its destiny. It's miles uncertain to you if your commercial enterprise will, nevertheless, be within the marketplace within the next three or 5 years. When you have a long-time enterprise, you can decide on a 5-year lease settlement as you've got a price range to pay for the rent. However, for the growing agencies, a quick-term rent is greater favorable and safe. You do not wish to get stuck in a long-time lease when your commercial enterprise destiny isn't always reliable. A brief lease has benefits as you can shift whilst you feel your business needs every other surrounding or outgrown the distance!

7. Clarity of insurance

While putting a commercial building on the lease, it is important to be clear with the landlord if there is any type of insurance you need to pay. Some landlords who have property insurance might pass the same to you. However, you might need to have liability policies or insurance for your business!

Bottom line

You have to trust yourself from within and you will do outstanding! Just keep asking yourself questions, what is it you are looking forward to!