Rental advice for first-time commercial tenants

Leasing a commercial property for the first time is both an exciting and daunting time for any fledgling business. It’s a chance for growing start-ups to spread their wings and expand their capabilities. By the same token, there is the not-so-small financial commitment of commercial rent that hangs over everything you do.

If you’re readying your business to take its next big growth step and rent commercial business premises for the first time, this article is designed to provide would-be tenants with valuable advice on securing a commercial property and lease that works for you.

Using a property agent gives you a valuable third-party

While it’s possible to negotiate your first commercial tenancy agreement without a third-party, it’s actually a good idea to go through a property agent for your first time. An agent can help to legitimise the process of choosing a commercial property and negotiating its rent. The agent can also act as a much-needed middle-man in the event of any future disputes over the tenancy agreement.

Consider a break clause

Although you don’t want to run before you can walk, it’s important to consider all future eventualities about your business. In the best-case scenario, your business will continue to expand and will outgrow your new premises. The last thing you want is that growth to be hampered by being tied to a long-term tenancy agreement. It’s always best to factor in periodic break clauses that offer flexibility for both tenants and landlords alike.

Be mindful of rent reviews

Rent reviews can be the bane of a commercial tenant’s life. The last thing you want with your first tenancy agreement is regular rent reviews. Ideally, you’ll have as few rent reviews as possible within the length of your agreement. If there are more than one rent reviews stipulated in your future agreement, just be mindful of the future financial implications this could have on your business in terms of increased overheads.

Sub-letting to other businesses

If there may be other smaller businesses in your proximity that could require part of your commercial premises, you could ask prospective landlords whether they would be happy for you to sub-let to them. This could save you money and reduce your overheads by earning rental income for previously unused space. Some tenants consider this option as a last resort, if they are struggling to make ends meet with their business.

Ensure your landlord is aware of minimum energy efficiency standards

As of 1st April 2018, minimum energy efficiency standards in England and Wales prohibited landlords from making new leases with tenants for commercial properties with energy performance certificate (EPC) ratings below E. From 31st March 2023, existing leases on premises rated E or less will require upgrades that could hit tenants hard in the pocket. It’s therefore vital that you choose a property landlord that has their finger on the pulse on energy performance.

Don’t forget – if it’s high-value, low-cost business space you’re after, Pall Mall Estates owns and leases more than 4 million square feet of commercial space to ambitious businesses like yours.

No matter what industry you’re in, we have flexible, feature-laden commercial properties for office, light industrial and workshop requirements. Call us today on 020 8108 7295 / 020 81808 4414 or start the ball rolling with an online enquiry.