A retail lease is an agreement between a lessor, i.e., a landlord, and a lessee, i.e., a tenant. A retail lease agreement states that a landlord can rent his asset to a lessee for a fixed period. The fixed period stated on a lease is generally 6 or 12 months or even longer. The lessee must make regular payments so that he and the lessor can withhold the terms to validate the agreement.
WHAT IS THE COMMERCIAL LEASE?
A retail lease is a commercial lease in premises for retail shop businesses. A retailer owns and manages this business to provide customers with goods and services. The property allotted for the lease must be used for commercial purposes only. The lessee must pay rent to the lessor for a fixed period, as their agreement states.
PROS AND CONS OF LEASING A COMMERCIAL PROPERTY
- Fixed monthly cost-While staying on a lease, you must pay the lessor a specific amount of money every month. The rent is less likely to increase over time, but if it does increase, you will be given prior notice. You will have to pay for some repair costs too now and then, but the landlord will pay for most of the maintenance.
- Space for expansion- If you have a growing business,you can lease 50,000 sq. ft, or more, depending on your requirement. While owning a property means your space will be limited.
- Access to amenities- While owning your commercial property means your access will be limited, staying on lease doesn’t limits you. You can access amenities that are very expensive to afford.
- Less tax – Owning a large commercial property means you have to pay heavy taxes, while staying on lease, your tax cost divides.
- The process is easy- Leasing a commercial property is much easier than applying for a loan to buy a commercial property. You will get many options to pick from while leasing a property. You can even lease a very expensive commercial property you cannot afford.
- No appreciation of property- While leasing has many benefits, you won’t enjoy the benefit of your property’s increasing value.
- Further expenses- Staying on a lease may become expensive because you have to pay the landlord every month, and you also have to pay other charges too, which includes repair and maintenance cost.
- No control- If your lease ends, you have to leave the property, and if you run out of business, you still have to pay every month to your lessor.
- No way to earn extra money- You don’t own the property; therefore, you cannot earn money by renting it to other tenants.
- Improvements will help the landlord- If you have improved some facilities of the commercial property, it will add value to the property, which will benefit the landlord.
Leasing a commercial property is better if your business is growing rapidly and you need more space for development. For example, if you want to run a business in Tempe, you might look for a retail space for lease in Tempe that has many amenities and other facilities to benefit your business. But buying a commercial property will be a better option if you can afford it.