Considerations When Renting Commercial Property

10 June 2021
 Categories: Real Estate, Blog

The majority of business owners prefer to lease rather than buy a commercial property. There are many benefits associated with commercial property rentals, including affordability, low maintenance costs, and strategic locations. However, selecting an ideal commercial property is not always a straightforward process. Knowing what to look for is more effective than learning from your mistakes. Here are some key considerations when looking for a commercial property for rent.


Location is by far the most crucial factor to consider when renting a commercial property. Typically, commercial properties are for business activities. Thus, consider whether the location of the building is ideal for the business you intend to operate. In particular, consider market dynamics such as population in the neighborhood, submarkets, and flow of customers. More so, evaluate the connectivity of the location with transport networks. You can also check for the availability of other service-related businesses and social amenities in the area. 

Type of Lease 

There are several types of leases for commercial properties. Thus, it becomes imperative to understand the option you have and its implications. The typical lease for commercial property rentals is the percentage lease. In this type of lease, you would pay the base rent and a percentage of sales from your business. Then, one pays the operating expenses and the base rent in a net lease. Lastly, the tenant pays only the base rent in a gross lease while the landlord takes care of the operating expenses. Being aware of the type of lease you are entering helps you anticipate and plan for applicable costs.

Land Zoning

There are government zoning rules regulating the use of land in a specific area. The following are the significant types of zone categories: 

  • Commercial
  • Industrial
  • Recreational
  • Agricultural
  • Residential
  • Mixed-use 

Operating a commercial or industrial venture in a residential area would be illegal. Therefore, it is essential to understand the zoning rules before renting a commercial property. In this way, you will avoid penalties or business closure for flouting zoning rules.

Lease Agreement 

The lease agreement acts as the contract between the tenant and the landlord. Importantly, take the time to read through all the contract clauses and understand their implication. If need be, seek clarifications where the clauses are ambiguous. The most important causes include the security deposits, rent amount, payment period, procedure, and timelines for rental increment. Again, the agreement may specify whether the tenant can improve the space and who assumes responsibility for utilities. Also, pay attention to the clause on subletting or assigning the space to someone else if you sell the business. Lastly, consider the lease termination details. Notably, most terms and conditions in a lease agreement are negotiable. Such considerations help minimize and manage conflict arising from commercial property leases.

A commercial property rental, unlike residential property, is more complex and less homogenous. Hence, the properties require special consideration when entering into tenancy agreements. Never rush to sign a lease agreement without understanding the applicable clauses.