Demystifying Commercial Lease Agreements: What You Need to Know

Demystifying Commercial Lease Agreements: What You Need to Know

It's no secret that rental costs in Antelope Valley have been rising steeply in recent years, and more and more people are drawn to the area for its economic opportunities in Palmdale and its connectivity to Los Angeles.

As such, we expect demand for commercial property rental options to also rise steeply. If you own commercial property in Antelope Valley, it is essential that you get to grips with commercial lease agreements, so that you can attract the right tenants and secure long-term, predictable returns on your investment.

With that in mind, here are the commercial lease essentials that any landlord should consider.

Key Elements of Commercial Lease Agreements

First thing's first, you need to draft up a lease agreement that covers the essentials and provides you and your tenants with certainty and stability.

The most important element of the lease term. This is where you clearly spell out the duration of the lease. It can be several months or several years.

Some tenants may seek flexibility and shorter leases, but others may want the certainty that a longer lease provides. Make sure that the rental fee is also included in the document itself, including whether it is fixed for the whole term or subject to adjustments.

Make sure all signing parties are clear on when the rent can be increased. And of course, don't forget to specify the security deposit.

Find the Right Model for Your Lease

Understanding commercial leases requires you to know the different types of leases out there and find the right model for your investment.

There's the gross lease, in which the rent is fixed and the owner (you) covers all maintenance and expenses. In this case, the rent is usually higher. There is the net lease, where the tenant agrees to take on certain expenses, such as insurance, taxes, and maintenance.

Then there is the percentage lease. Here, the tenant pays a lower base rent, plus a percentage of their business sales. This is most common with retail spaces and can be a great way to offer flexibility and potentially make higher returns than on a standard lease.

Expert Lease Negotiation Tips

No lease agreement guide would be complete without some handy tips for negotiating the best deal for both yourself and your commercial tenant.

First, research the market. Understand the average rental rates in your area, so that you have the local knowledge that will give you leverage during negotiations.

Make sure to consult the professionals. A real estate attorney, broker, or professional property management service can offer valuable advice. They ensure you understand the lease agreement guide and avoid common pitfalls.

Finally, make sure to factor in flexibility. Try to include flexible terms like easy lease renewal or subleasing options to provide security and peace of mind for tenants.

Full-Service Lease Management in Antelope Valley, CA

Commercial lease agreements are all about balance, providing both secure returns for the landlord and flexibility and stability for the tenant. If you need help drafting and negotiating win-win lease agreements, we have got you covered.

At PMI Antelope Valley, we offer extensive, local experience to help landlords like you get the best deals on your commercial property. You can consult our dedicated commercial tenant guide to find out exactly how we can help you.