Important Questions to Ask About Commercial Real Estate

When you are looking for commercial property, there are a few important questions to ask about commercial real estate property before making an offer. Find out about the type of commercial lease offered, its minimum term, and the property’s amenities. Additionally, find out about the insurance coverage required. These are some of the most important questions you should ask your commercial real estate broker.

What type of commercial lease is being offered?

Before you sign a commercial lease, you must understand what type of agreement you are signing. A commercial lease is a legally binding landlord and tenant agreement. A commercial lease is much more complex than a residential lease, and the terms and conditions vary by business type.

A percentage lease is a commercial lease requiring the tenant to pay a fixed percentage of their gross sales. This type of lease is typically used for retail property. These leases are advantageous for small businesses that don’t generate large amounts of revenue because they help them keep their rental costs low until sales increase. Typically, the percentage is seven to twelve percent of the tenant’s sales.

Another type of commercial lease is a license agreement. This agreement allows the landlord to lease a specific building area to a tenant. The tenant pays the landlord’s annual rent and is responsible for janitorial expenses, property taxes, insurance premiums, and CAMs.

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What is the minimum lease term?

The term “minimum lease term” in the commercial real estate industry refers to the minimum period for which the tenant must pay rent. This term is not the same for every commercial lease. Depending on the type of space, this term can range from one to three years. However, landlords are usually reluctant to accept leases longer than 15 years.

In New York, the state’s Real Property Law, or SS226-b, provides that a tenant can terminate a commercial lease if the landlord refuses to grant the tenant’s request. The law also provides that tenants can assign their lease, which can be helpful if the business no longer makes financial sense. Assigning a lease can also be beneficial if a merger or acquisition is in the works.

What insurance coverage is required?

Insurance is essential to owning a commercial property, as it protects the property owner from the financial loss associated with unexpected events. Insurance companies offer different types of coverage for different kinds of risks. Commercial real estate policies protect physical property and equipment from loss or damage.

Commercial property insurance policies are available in a variety of forms and levels of coverage, but many elements are common to many providers. This article discusses some of the basic concepts that are important to understand and the types of coverage available. Your insurer can provide you with more detailed information about the types of insurance you need and help you get the best policy for your situation.

The type of coverage available will also impact the cost of insurance. For example, office space insurance policies will cost more than those for parking garages. This is because office space owners need higher insurance coverage than owners of parking garages.

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How much parking is allotted to the renter?

When renting commercial real estate, it is vital to negotiate how much parking the property will provide. Typically, commercial spaces will be quoted with a parking ratio of spaces per 1,000 square feet. This means that a tenant with a 10,000-square-foot space would be allocated 40 parking spots. This is a critical point for negotiation, as inadequate parking can leave employees without a place to park. Fortunately, most commercial leases address this issue.

Can you make changes to the office space layout?

Before making any changes to your office space, it’s essential to understand your company’s current needs. For instance, your team may no longer need a traditional meeting room. Many employees are already using tools like Zoom or Teams to communicate. Likewise, conference phones may no longer be necessary. Instead, projectors will be needed to facilitate meetings. Private offices are also quickly becoming obsolete. Changing the layout of your office space can be a great way to improve collaboration and communication.

Creating an open floor plan is a great way to make your office feel more inviting and comfortable. It will also make employees more accountable since they can see each other easily. Adding a common area to your office will create a space for people to collaborate, regardless of their work style.

Today’s companies want the right mix of collaboration, efficiency, and innovation. For example, IBM found that people needed more interaction when they were not in the office, which led to a need to create mentorship relationships. While some companies still rely on technology and communication platforms to help their employees stay connected, most choose an activity-based office layout.

Important questions to ask about commercial real estate conclusion

It’s crucial to find an appropriate place that matches your business demands, whether you’re leaving your home office or your growing staff is outgrowing its existing facility. While looking at numerous various spaces, it’s important to know what questions to ask when touring a commercial property in order to thoroughly weigh your alternatives. If you’re interested in buying or leasing commercial real estate contact us and one of our local agents will be glad to assist you.