Lease development for commercial properties can be a difficult process on both sides of the equation. Crafting a comprehensive lease can be a challenge for landlords while understanding what it says can be hard for potential tenants. Though leases of all kinds can come with their own complications, “most experts would agree that commercial lease negotiations pose unique challenges” as compared with other varieties, such as residential.
Good Commercial Lease Development Is Crucial
As a commercial property manager, you have a duty to yourself and your “customers” to “exercise due diligence.” That means your crafting of the lease should involve a great deal of care and checking to make sure the details are all-encompassing and exactly right. While negotiating, there should be a dialogue between you and the tenant to ensure that both sides find things to be a mutually beneficial relationship. “A commercial lease provides a roadmap for the tenant/management company relationship.” If you want the “road” to be a smooth one, then consider some of the following tips to better lease crafting.
The most obvious consideration is the state of the potential tenant’s finances. If they aren’t able to afford the space, then you obviously miss out on business, and they will have to scramble time after time to get the rent together, amassing stress for all involved. In addition, it affects a variety of other factors, including “credit worthiness scores, potential concessions and lease pricing, incentives… flexible lease arrangements and delinquent fee schedules.” Obviously, their financial status is a hugely important piece of lease development and should not be overlooked.
Be as clear and detailed as you can when drawing up commercial leases. If your tenants don’t know their allowances and expectations, then they may break a rule without even knowing it. Likewise, you should be transparent about what they can expect from you and what is and is not within your realm of responsibility so they don’t call on you for things that aren’t your job. Of course, you can also just gently remind them of where to direct those concerns, but it’s best for everyone if they know from the start.
Obviously, the purpose of lease development is for legal reasons. You want legal protection for your business as much as possible to guard against liability, which can become an issue despite your best efforts. Try not to overlook any part of the process in favor of expediting it, or you may find yourself in a lot of trouble down the road when something happens that isn’t covered in the lease.
We’ve discussed it in depth before, but utilizing technology for your business needs is a great way to get a leg up on the game. The entire process is made easier if you’re able to do so. For example, most listings that attract the attention of potential renters is found online on various space-seeking websites. Make sure that your property is on all the major sites and with as much detail as possible, including photos, so they know exactly what to expect. You don’t want to have to deal with misinformation later, which can have the potential renter leaving dissatisfied and possibly ready to post a bad review online.
There are also “rent comparison tools” to aid in lease development. If the tenant says that they saw a particular rate at a different location and want you to adapt to meet that, you should be able to determine if they are being honest with you and to show them in hard facts where your property stands in regard to others. Finally, remember that throughout your business, you can used “the cloud” to keep track of everything in one place so that you never need to worry about losing any information.
Part of being a good commercial property manager is trying to understand your tenants. If you have a better grasp on the wants and needs of the people who are renting from you, you’ll be better loved and reviewed, and ultimately will find more success. This all begins when you are working on their lease development, so don’t forget to consider their point of view when crafting it. Imagine that you are in their shoes; what might you want from a commercial property? It might not all be feasible, but they’re likely to see that you’re putting in the effort for them.
As mentioned above, a solid technology solution can make a huge difference in how smoothly your business runs. If you’re looking for a software to manage tenant information and to retrieve it in no time at all, considering SKYLINE Property Management & Accounting Software. SKYLINE is know for its ability to organize documents of all kinds into its comprehensive database, which of course would include leases. What are you waiting for?