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5 risks to consider when leasing commercial property

On Behalf of | Apr 25, 2023 | Commercial Real Estate |

Leasing commercial property can be an excellent way for businesses to secure a prime location without the financial burden of purchasing the property. However, leasing also comes with its own set of risks that businesses need to consider before signing on the dotted line.

Here are five potential risks that businesses should be aware of when leasing commercial property.

1. Lengthy lease terms

One risk associated with leasing commercial property is being locked into a lengthy lease term. Long-term leases can be problematic if a business outgrows the space or if the location is no longer suitable for the company’s needs.

2. Unexpected costs

Leasing commercial property can also come with unexpected costs, such as maintenance fees, property taxes and insurance premiums. These costs can add up quickly and put a strain on a business’s finances.

3. Restrictive lease terms

Some commercial leases may contain restrictive terms that limit a business’s ability to modify the space, display signage, or operate during certain hours. These restrictions can negatively impact a company’s operations and growth.

4. Market fluctuations

Market fluctuations can impact the value of commercial property, which in turn can affect the cost of rent. If rental prices decrease in the area, businesses locked into long-term leases may find themselves paying above-market rates.

5. Zoning and permit issues

Lastly, zoning and permit issues can pose significant risks to businesses leasing commercial property. If a property is not zoned for a specific type of business or if the necessary permits are not in place, businesses may face fines or have to move.

While leasing commercial property can provide many benefits, it also comes with potential risks. By being aware of these risks and taking proactive steps to mitigate them, businesses can enjoy a successful leasing experience and focus on growing their operations.