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Important considerations when looking for a commercial lease

Dallas real estate is always in demand. That can make finding a commercial lease a little intimidating, and cause new businesses to jump on the first available rental.

However, when considering a commercial lease, it’s important to make sure it fits what your business is looking for. Here are some important factors to consider:

The structure of the lease

Unlike what many assume, commercial leases come in several different structures. There are four common lease structures:

  1. Full service/modified gross lease – Your base rent includes a portion of any structure repair costs and all operating expenses.
  2. Single net lease–Your business is only responsible for utilities and property tax (and rent of course). Everything else is covered by the landlord.
  3. Double net lease–The renter covers utilities, property taxes and insurance. The landlord is responsible for any repairs and all maintenance costs.
  4. Triple net lease–Everything but structural repairs is included in your lease.

Which is right for your business depends on what you need from a property. Busier locations will likely feature more landlord-friendly leases. If your business relies on a lot of customer interaction, it may be worth it to take on one of these leases.

Escalation clauses

Used to cover increased costs associated with a building, these clauses can cause your initial rent figure to balloon throughout the life of a lease. It’s important to directly ask a landlord about escalation clauses and what triggers them.

If you don’t, you could find yourself locked into a lease with rapidly rising payments.

Available out clauses

As a business, you need to be able to evolve or adapt as necessary. Most commercial leases will allow you to include an out clause if the location isn’t meeting the needs of your company. Many of these clauses are structured so that you must find a suitable replacement tenant.

It’s important to discuss the options available and if an out clause is something the landlord is amenable to.

Weighing your options

Just because Dallas is a competitive real estate market doesn’t mean you need to jump on the first commercial lease you find. Examine your business’s needs and make an informed decision before signing anything.

If you have any questions about commercial lease standards, a skilled real estate attorney can be a great resource.

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