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Considerations when crafting a commercial lease for your Texas business

Texas continues to have one of the highest rates of commercial development in the nation. According to a recent report from NAIOP, North America’s largest commercial real estate organization, Texas ranked second in commercial real estate development activity in 2012, just behind New York. Authors of the report credited Texas real estate development in 2012 with $4.34 billion in spending and new projects, creating 162,877 jobs.

The right location and adequate space are critical features to the success of a business. With the economy improving and Texas businesses moving quickly to snatch up commercial space, if you are starting a business, you may need help with a commercial lease.

Much more to a commercial lease than just rent amount and lease term
The most obvious negotiation points in a commercial lease are rent and the lease term. Leased spaces account for some of the largest expenses incurred by businesses, and you want to ensure you are paying a reasonable rent. At the same time, you need a lease term with the right balance of security and flexibility for your type of business. For most small businesses, a one to two year lease term with the option to renew is generally recommended.

There may be a number of expenses beyond rent factored into a commercial lease, such as the cost of utilities or upkeep fees for shared areas. Extra fees can add up to become significant expenses, so any lease term pertaining to such fees should be carefully reviewed.

Maintenance responsibilities should be clearly defined in a commercial lease. Some commercial leases put the burden of facility maintenance on the tenant, while others place maintenance responsibility on the landlord for certain systems, such as plumbing or air conditioning. Whatever balance you are able to strike, when part of the premises is in need of repair, the lease should make it unambiguously clear who is responsible.

There are a number of other lease clauses you may also wish to explore in order to safeguard your long-term business interests. For example, it could make sense to preserve your right to sublease the premises to another business or to include an exclusivity clause that keeps the landlord from leasing space near your business to a direct competitor. You should also vet the lease terms that apply to default; if you miss lease payments, will you have any kind of grace period? Or, can you pay the rent only for the current month in the event of default rather than the full amount remaining on the lease?

Talk to a Texas small business attorney for help in drafting and negotiating a lease
Getting the right commercial lease is one of the most important steps in starting or expanding your business. Although commercial leases are often presented as standardized forms with set terms, make no mistake: commercial leases are negotiable business contracts, and can be tailored to meet the individual needs of your business.

A small business attorney can help you craft a commercial lease that suits your business, and can negotiate with landlords on your behalf. Talk to a Texas small business attorney today to get the help you need with a commercial lease.