Anticipating the future is difficult, especially when it comes to leasing commercial properties. That’s why financial advisors often tell you to set aside a contingency fund to take care of unpredictable situations. However, there are a lot of surprises you can prepare for.
Whether you’re looking for a new office space, shared working space, scouting a space for your retail outlet, or something else, a little preparation goes a long way. Before you sign the commercial lease in Kelowna, staying prepared for those surprises helps you resume smooth business operations as soon as possible.
Avoid these surprises when you choose to lease a commercial property:
1. Don’t get emotionally attached to a space
You may have a dream space in mind you want to lease out. There are high chance that you have already planned the perfect office with a certain layout, great amenities and other exclusive features.
You may have an architectural style that really stands out to you and think that it may be great for boosting employee productivity. However, unless it’s backed with solid proof or research and the returns are justifiable enough for the rent, it’s best not to ‘fall in love’ with a property. Make smart decisions and think with your mind instead of heart when looking at commercial properties for lease.
2. Account for renovations and repairs
In the perfect world, you sign a lease, move into a new space and start running your business or office immediately. However, the process isn’t usually so smooth sailing. You must account for renovations and repairs and account that into the final cost before signing the contract. Some industries attract strict regulations for buildings to be a certain way and must have certain features.
For instance, restaurants must have a grease trap. You must account for those renovations before the lease is finalised. If you want to make sure that you don’t run into renovation overruns, inspect the property thoroughly or work with reputable real estate developers instead of moody and unpredictable landlords while browsing through commercial spaces for lease.
3. Account for downtime
Entrepreneurs often underestimate downtime when moving to a new location. Let’s assume that you’re moving the office to a different city. Your employees won’t be able to start working as soon as you prepare the office. Everyone is going to take time to rethink their commute or relocate to a new place.
If you’re planning to hire new employees locally, you’ll need to spend time listing ads putting out posters and interviewing several candidates before finalising on a few. If you’re an IT company, you may need to look into setting up basic infrastructure and specific security measures to protect client data. These things take time and invite sudden disruptions. So if you assume a week long downtime, prepare for a three-week delay. Otherwise, you can choose an office space for rent in Kelowna that has all the necessary infrastructure and setup you need.
4. Watch out for rent escalation
Scrutinise your lease agreement carefully and don’t forget to check the rent escalation clauses. Rent escalation clauses exist to protect landlords from unpredictable market changes and inflation. They are usually based on a predetermined formula or linked to an index like the CPI(Consumer Price Index).
Make sure to check the formula or the rent escalation rate before signing the lease. If the rate is too high, the rent may become unaffordable for you very quickly. Reputable real estate companies want to retain their clients for the long term and secure a steady cash flow. When you lease a commercial property in Kelowna from them, you can also negotiate those rates so that it’s a favourable solution for both parties.
5. Account for extra costs
Many entrepreneurs who are looking to rent an office for the first time think that their expenses end with the lease. However, you also need to cover the legal fees to hire a lawyer who can review the contract and negotiate better terms. Moreover, you also need to pay for insurance to protect your business from potential risks and damages. It’s also important to be aware of termination costs that tenants need to bear when terminating leases early on. Make sure to negotiate favourable terms so that you don’t need to pay an unreasonable amount.
Leasing a commercial property is very exciting for entrepreneurs since it acts as proof of the next step in their growth journey. However, it’s important to look past the initial thrill and stay prepared for the above-mentioned surprises.