10 Common Mistakes to Avoid When Leasing Commercial Space

December 11, 2024

Leasing commercial space is a significant step for any business. Whether you’re expanding, relocating, or launching your first location, the process can be complex and full of potential pitfalls.

For those navigating the market for commercial property in Denver, avoiding common mistakes can save time, money, and headaches.

To help you make informed decisions, we’ve outlined ten of the most common mistakes businesses make when leasing commercial space – and how to avoid them.

1. Not Researching the Local Market

Denver’s commercial real estate market is dynamic, with varying trends across neighborhoods like Downtown, Cherry Creek, and RiNo. Failing to research market conditions could lead to overpaying or choosing a less-than-ideal location for your business.

Avoid This Mistake:

  • Investigate rental rates, vacancy rates, and neighborhood trends.
  • Consult with a local broker experienced in commercial property in Denver for market insights.

2. Choosing the Wrong Location

Location is critical to your business’s success, but many tenants focus solely on cost rather than the broader implications of their choice. A cheaper space may come with drawbacks like poor visibility or inadequate foot traffic.

Avoid This Mistake:

  • Consider proximity to your target customers, suppliers, and employees.
  • Evaluate accessibility, parking, and nearby amenities.

3. Underestimating Space Needs

Leasing too little space can limit your operations, while leasing too much can burden you with unnecessary costs. Many businesses miscalculate their space requirements.

Avoid This Mistake:

  • Assess your current and future needs for office, storage, and customer areas.
  • Factor in potential business growth during the lease term.

4. Neglecting to Review Lease Terms Thoroughly

Commercial leases often include clauses that favor the landlord, and tenants who fail to scrutinize these agreements may find themselves stuck in unfavorable terms.

Avoid This Mistake:

  • Hire a real estate attorney to review the lease agreement.
  • Look for hidden costs like maintenance fees, escalation clauses, or ambiguous renewal terms.

5. Overlooking Zoning and Permits

Each area in Denver has specific zoning regulations, and not all commercial spaces are suitable for every business type. Neglecting to verify zoning compliance can derail your plans.

Avoid This Mistake:

  • Check zoning restrictions with the Denver city planning office.
  • Ensure the space has the necessary permits for your intended use.

6. Ignoring Hidden Costs

The base rent is just one part of the cost of leasing a commercial property. Many tenants fail to account for additional expenses like utilities, maintenance, taxes, and insurance.

Avoid This Mistake:

  • Ask for a detailed breakdown of all costs, including Common Area Maintenance (CAM) fees.
  • Budget for fluctuating expenses, such as seasonal utility costs.

7. Signing Long-Term Leases Without Flexibility

While long-term leases may offer lower rent, they can also lock you into a space that may not suit your future needs. Businesses that grow or pivot often regret signing inflexible agreements.

Avoid This Mistake:

  • Negotiate options for early termination or subleasing.
  • Include clauses that allow for expansion within the property if needed.

8. Not Negotiating Lease Terms

Many tenants accept lease terms as-is, missing opportunities to negotiate better rates, improvement allowances, or more favorable conditions.

Avoid This Mistake:

  • Research comparable lease rates in the area.
  • Work with a broker to negotiate terms that align with your business goals.

9. Failing to Inspect the Property

Some tenants skip a thorough inspection, only to discover issues like outdated wiring, plumbing problems, or inadequate HVAC systems after moving in.

Avoid This Mistake:

  • Hire a professional to inspect the property before signing the lease.
  • Request necessary repairs or upgrades as part of your lease agreement.

10. Overlooking Exit Strategies

Circumstances can change, and businesses that don’t plan for an exit strategy may face challenges if they need to terminate their lease early.

Avoid This Mistake:

  • Include exit clauses, such as subleasing or early termination options.
  • Understand penalties and fees associated with breaking the lease.

Final Thoughts

Leasing commercial property in Denver is a significant commitment that requires careful planning and due diligence. By avoiding these common mistakes, you can secure a space that supports your business’s success without unnecessary stress or expense.

Whether you’re looking for office space, retail storefronts, or industrial facilities, taking the time to research, negotiate, and plan will pay off in the long run. Partnering with a knowledgeable local broker and understanding your lease terms are essential steps toward making the most of your investment in Denver’s vibrant commercial property market.

Ready to find the perfect commercial space in Denver? Contact us at Denver Commercial Properties to explore your options and ensure a smooth leasing process.