Are you looking for the first brick and mortar location for your business? Have you outgrown your current store and need a bigger space?
If the answer is ‘yes’ to either of these questions, you are going probably going to be looking at a commercial lease. With this said, leasing a space for your business can end up being an easy process or your worse nightmare.
It all depends on the leasing terms that are set forth in your contract. We will look at five phrases or words that you should look for and explain what they mean.
Keep reading for more information!
1. Common Area Maintenance (CAM)
CAM fees are extra charges besides the rent paid each month. These are common in multi-tenant buildings such as strip malls and office facilities.
These fees take care of public areas like walkways, elevators, and the landscaping of the building. They may also go toward replacement lighting costs, HVAC repairs, and general upkeep of the grounds.
If you are familiar with homeowners’ associations & their fees, CAM stipulations are quite similar–basically in place to keep the property looking beautiful and functional.
2. Turnkey
A turnkey property is ready to move into. This means you won’t have to change the floors, painting, plumbing, or wiring–unless you want to.
These types of properties are ideal for business owners that are trying to move into their next location quickly. Think of this term as, ‘when you turn the key, it is ready for your business!’
3. Full-Service Lease
Opposite to Common Area Maintenance fees, a full-service lease allows for one monthly rent payment. The understanding is that the landlord will handle all other expenses that are associated with the property.
This is a great way to avoid higher than expected CAM costs as the total rent is adjusted to reflect maintenance costs. A full-service lease may lead to slightly higher rent payments, but if a costly piece of building equipment breaks, it is already covered.
If you choose to sign a full-service lease, be sure to do so through a reputable company like Cherry Creek Commercial. This is simply to protect your business as there is nothing worse than paying a higher rent only for a landlord to ‘overlook’ facility-related problems.
4. Rentable & Useable Square Feet
These terms both apply to the amount of space you are renting. Your useable square feet includes the space that only your business uses.
Rentable square feet includes the other space in the building that all tenants can use. This is usually inclusive of restrooms, lobbies, hallways, and stairwells. If you are the only tenant in your facility, this isn’t typically an issue.
5. Lessor/Lessee
Even for the most business-savvy people, reading a lease sprinkled with the terms ‘lessor’ and ‘lessee’ can get confusing.
To make this simple, the lessor is the landlord or property management company. The lessee is you, the tenant. Commit this to memory to ensure you know who is responsible for what parts of the lease.
Making Sense of Leasing Terms
There are so many leasing terms that are found in rental agreements. They can be confusing and potentially cost your business money if they aren’t fully understood.
If you can’t seem to keep the terminology straight and don’t have time to dissect the contract yourself, ask an attorney to read through it.
Should you like other helpful tips for your business, check out our blog!
