Commercial Landlord Requirements
Entering the commercial leasing market can be a daunting process if approached without being fully prepared. However, with assistance from a professional agent, landlords can be guided from inception on the various aspects of commercial leases, and the respective responsibilities of the landlordand the tenant.
Here are a few insights into the various documents required prior to placing a property on the market.
1. The Heads of Terms: This will outline the proposed terms of a lease and is a quick and simple way to identify the landlord’s requirements. This therefore provides the foundation for any subsequent negotiations. Although much of this information will ultimately be captured in the lease, it is useful to share with any interested party.
• Property name and location
• Premises being rented
• Size of space available
• Date available for rent
• Price per sq. ft. per annum
• Service Charge or CAM (Common Area Maintenance) per sq. ft. per annum
• Deposit required
2. Letter of Intent (LOI): This should be completed by each interested party and submitted to the landlord for approval. Details usually required from the tenant are:
• Name, address, contact details.
• Business registration
• Corporation name and directors
• The space interested in renting
• Date required and length of tenancy
• Some form of business or banking reference
On landlord approval additional information may be requested from the tenant. This information may vary according to the type of business which will be conducted e.g., retail versus office.
3. Rules and Regulations for Outfitting and Operation: This document will also be appended to the formal lease.
Outfitting – Tenants need to know how long the landlord has allocated for this processs. It is common pratice to allow a tenant a rent free fit-out period of one or two months with the utilities paid by the tenant during this time. If there is no source of electricity or other such facilities at the time of outfitting, the landlord needs to advise where the tenant can access these. It also needs to be clear what noise levels are to be expected and how it may impact other tenants/operators. There should also be a clear understanding of who bears the responsibility for specific changes, i.e landlord or tenant, as it relates to installation of AC units, adding cubicles, rewiring for better communications, etc. The changes should be compliant with the building code and electrical capacity.
Operation – Clear rules and regulations should be supplied to the tenant as it relates to: use of the property, opening times, parking allocations, music/noise level and provision of security.
4. The Formal Lease: This is produced by an attorney. The lease once signed, usually in black ink and stamped with a company stamp, will then be registered by the landlord with the Commissioner of Inland Revenue. The lease is a legally binding contract between the landlord and the tenant.
Specifications – Besides the general names, address, size of spaces, it should be clear if there are any rent increases over the lease term and/or CAM revisions – the latter is usually reconciled to actual on an annual basis and adjusted accordingly.
CAM details – A clear list of what is included in the CAM. Confirmation should also be made at this time whether any utilities are included, such as water.
In a nutshell, this list outlines some of the documentation required for commercial property leasing. We recommend that landlords seek guidance from the appropriate professionals to ensure that proper documentation is in place, to attract and retain the best tenants.