5 Fast Facts About Renting Commercial Space in 2023
Commercial real estate is evolving at a rapid pace, and businesses are starting to realize the importance of renting space rather than owning it. By 2023, experts predict that the commercial real estate market will have changed drastically. Here are 5 fast facts about renting commercial space in 2023:
Commercial Leases Tend To Have Longer Terms
In the past, commercial leases were typically 5 years or less. However, in recent years we’ve seen an increase in the number of businesses signing leases with terms of 5-15 years. This is because businesses are starting to realize that it’s more important to have stability and predictability when it comes to their space.
Annual Rent Increases Are Normal
The majority of business leases include an escalation provision, which says that rent will increase on each lease anniversary. This increase might be a set percentage or it could be adjusted annually to follow the Consumer Price Index. Rent increases are limited to once each year, and you must be fully informed prior to any increase. When considering a lease, make careful to evaluate the escalation clause to your predicted cash flow growth to ensure that rent does not exceed your budget.
Fit-Out And Making Good Are Your Responsibility
Internal fixtures and fittings are essential for various rooms, particularly in retail properties. This is known as fit-out, and it is done at the tenant’s expense, though a landlord may provide it as a deal-closing incentive. Fit-out charges should be factored into your budget.
You’ll also be liable for “making good” at the end of a lease. This implies you must restore the property to its original condition, including removing all additions, fixtures, and fittings, as well as fixing any damage. However, normal wear and tear are usually overlooked.
You Can Only Use Your Commercial Property As Stated In The Lease
Your lease agreement will specify the permitted uses of the business property. This explains what the property can be used for, whether it’s retail, warehouse, and distribution, café space, or something else. Consider not only your present business operations when negotiating your lease, but also any plans you have to expand or diversify your offers. It’s also probable that this condition will prevent you from assigning the lease to another individual if you want to sell your business, thus broad permissible use is in your best interests.
A Professional Real Estate Agent Is Your Best Friend
You will want to consult with a real estate agent who specializes in commercial leasing. They have an intimate understanding of the market and can guide you through the negotiation and paperwork involved in renting commercial space.
So there you have it, 5 fast facts about renting commercial space in 2022. If you’re looking for a professional real estate agent to help guide you through the process and negotiate on your behalf, we would be more than happy to assist. Give Synergy Work Suites a call today – they would love to hear from you!