Commercial Leases in Colorado – 7 Things to Know

Going into a commercial lease is a huge commitment for any business. Most commercial leases can last for decades, and accepting less than favorable terms can hurt your business for years to come.

This article outlines seven things you should consider while negotiating a new commercial lease.

If you didn’t get it in writing, it didn’t happen.

If you don’t have an agreement written down in the final contract, that agreement does not legally exist.

A lease contract is only as good as the provisions in the document. If you or your landlord verbally agree to specific terms, get it in writing. Anything not written down will not be legally enforceable.

Research and investigate all parties involved in the lease.

Research the people claiming to be the landlord. You may find out that the property owner may, for example, have financial issues and may try to pass them onto you as the tenant.

Physically inspect the property.

Never sign a lease without first inspecting the property. An inspection can alert you to unacceptable conditions on the property the landlord may have decided not to disclose.

Understand how your landlord calculates your rent, and what obligations you face.

When leasing a commercial space, your landlord calculates your base rent by the price per square foot of leased space. Take the time to figure out how they calculate the area on that property, and what goes into that calculation.

For example, some landlords will include wall space in the square footage calculation. If two properties have the same price per square foot, and one of those spaces calculates wall space into the rent, the usable space’s cost is more expensive.

Know what improvements will be done and how to get them handled.

Your space will often need improvements before you can work in that space. The property wouldn’t be likely to have the modifications you will need immediately unless someone in a similar business rented the space.

If you make any improvements, make sure your landlord doesn’t put in the contract that he gets to keep all the upgrades you made in the space. If you have specialized equipment you want to take with you, should you decide to relocate, make sure that equipment can go with you when you leave.

Understand Your Insurance Obligations.

Business owners often overlook insurance requirements. You need to understand what types of insurance you need and the amounts they cover. Don’t bind yourself to an insurance policy you can’t afford.

Negotiate For a More Flexible Lease Term.

Commercial leases can last for possibly decades. If you’re starting with your business venture, signing a contract worth thousands of dollars per month for more than ten years might not be the best idea.

See if you can negotiate a shorter lease and the right to renew or extend your lease at the end of your term; this will give you the flexibility of reduced time obligation and the ability to continue renting that space should you choose.

Hire an attorney.

Commercial leases are lengthy and complicated documents. The smallest details buried in such a document can determine whether your business succeeds or fails. Without an attorney, negotiating better terms will be an uphill battle, especially for someone unfamiliar with how to navigate commercial leases.

Hire an attorney with years of experience drafting and negotiating commercial leases. You can be sure that we will look out for the best interest of our clients. We will advise you on the risks hidden in the landlord’s proposed lease and help you negotiate for more beneficial terms.