Commercial real estate is a lot different from residential, especially when it comes to renting. For instance, Ontario does not have a standard lease agreement for commercial real estate. Instead, if you do plan to rent a business space, you will need to work with the property owner and a commercial real estate agent to negotiate a commercial lease agreement that aligns with the needs and interests of both parties. As you might expect, this is often easier said than done.
In this blog, we’ll look at how to negotiate a commercial real estate lease and other key pieces of information you should know when renting a business space.
Start With an Expert
It’s hard to overstate just how nuanced commercial real estate can be. So, whether you’re just starting your hunt for the perfect commercial property or have found a space and are about to negotiate with the owner, it’s a good idea to have an expert in your corner. More specifically, a professional commercial real estate agent.
At the end of the day, landlords are looking out for their best interests – not yours – and because there’s no standard lease agreement for commercial real estate in Ontario, there’s a lot of room for them to take liberties when sketching out your lease.
So, before you sign on the dotted line, you’ll want to make sure your lease agreement is fair, easy to understand, and of course, legal. The best way to do this is with a commercial Realtor at your side who knows what to look for.
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Should I Sign a Commercial Lease Agreement?
The short (and long) answer is yes.
In Ontario, you’re not legally required to sign a lease agreement when renting a commercial property. However, keeping things under the table isn’t the type of win-win arrangement many entrepreneurs think it is.
Renting a business space with no strings attached sounds great at first, but it’s actually full of risks. For starters, without having any details outlined on paper, you’re essentially waving goodbye to most of your tenants’ rights. Your landlord could raise the rent, or worse, kick you out on a moment’s notice with very little (if any) recourse.
How do Commercial Leases Work?
With no standard commercial lease agreement to follow, the tenant and landlord must negotiate and agree on a contract that works for both parties. Property owners may have their own stock lease agreement that they can provide as a starting point, but most details will be up for negotiation. As a tenant, this is your chance to ensure the agreement protects and represents your specific goals.
For example, with no minimum length of tenancy, typical commercial lease terms can vary based on the type of property, the tenant’s business model, or market factors. If you’re looking for something long-term, you negotiate this part of your lease with the help of your agent.
It’s worth noting that although commercial lease agreements are typically bespoke, not everything goes. Commercial leases do have to follow certain rules under Ontario’s Commercial Tenancies Act (CTA).
What Should Be Included?
In our opinion, the details of your commercial lease agreement should be completely individual to your needs. However, there are a number of important details that should be clearly defined on it – they include:
- Rental rate
- Deposit amount
- Insurance requirements
- Use of the property
- Repairs, maintenance, and other property-related responsibilities
- Length of tenancy
- Process of lease renewal
These are basic elements that are a part of all commercial real estate leases, but don’t forget that there will be additional agreement clauses, duties, and other add-ons included.
Have questions about commercial real estate leases? Check out these blogs next.
- My Restaurant Lease is Ending, What Can I Do?
- What’s Included in a Restaurant Lease?
- Should You Buy or Lease Your Next Restaurant?
Ready to Lease? We Can Help!
Information is key when it comes to negotiating a commercial lease agreement. With that in mind, as you work with a landlord to create a lease agreement, it’s essential to bring in someone who is uniquely knowledgeable about commercial properties, market trends, the needs of business owners as tenants, and more. That’s where we can help – Carve Real Estate.
On top of helping you track down the best commercial property to bring your business to life, we can also assist in negotiating your lease agreement. Reach out today.
Searching for the right place to bring your business goals to life? We can help! Reach us by email at ryan@carverealestate.com or by phone at 416-618-0054.
