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Clauses business owners should consider before leasing space

| May 23, 2016 | Commercial Leases

If you are a business owner looking for a new venue, you have probably learned about the trends shaping commercial real estate in Southern California. Essentially, the outlook is optimistic, meaning that construction of new buildings and renovations of older properties will continue at least until 2018 barring any major catastrophes. This may bring about a seminal question for business owners: whether to rent space or to buy property.

Indeed, there are many who are not financially able to make a purchase right now, but given the desire for building owners to fill space, leasing may be an attractive option. Despite this, it is critical for business owners to closely scrutinize the terms of a lease, so that potential problems can be mitigated.

This post will focus on a few important clauses to pay attention to.

Sublease – It is important to have flexibility in the lease, given how business plans can change which could lead to your company relocating. So you should have the ability to rent the space to another tenant. After all, you should not be paying for space you are not doing business in.

Co-tenancy clause – Part of the attraction of (and the cost for) a particular space is being next to a prime anchor tenant such as a Barnes & Noble or Best Buy. But if that tenant leaves, what will happen to your business? Because of this possibility, having a co-tenancy clause  that allows you to break the lease if the landlord does not replace an anchor tenant can be helpful.

Exclusivity clause – In today’s competitive market, no one wants to be located next to a rival. As such, an exclusivity clause that bars a competitor to lease space near or next to your business should be considered.

If you have additional questions about commercial leases, an experienced real estate attorney can help.