ResourcesOperate5 min read
Choosing your first commercial space: a checklist
A first commercial space makes a business feel real in a way nothing else does, which is exactly why founders overpay for it. A lease is often a multi-year, five-figure commitment signed with less scrutiny than a used-car purchase. Here is the checklist we wish every founder ran before falling in love with a storefront.
1. Compute the true monthly cost, not the rent
The advertised rent is the beginning of the number, not the number. Commercial leases, especially triple-net (NNN) ones, commonly pass through property taxes, insurance, and common-area maintenance (CAM) on top of base rent. Add utilities, trash, internet, and any required insurance of your own. Ask the landlord for the all-in monthly figure in writing, then add annual escalations, most leases raise rent every year, and look at year three, not month one.
2. Read the lease terms that actually bite
- Personal guarantee: most first-time tenants are asked to guarantee the lease personally. Understand exactly what you are promising and for how long; guarantees can sometimes be negotiated to a limited period.
- Term length and exits: a long term locks in a young business whose needs will change. Ask about shorter initial terms with renewal options, subletting rights, and early-termination language.
- Who pays for what breaks: HVAC repair clauses alone have ruined tenant budgets. Clarify maintenance responsibility system by system.
- Escalations and pass-through caps: annual increases and uncapped CAM can quietly outgrow your revenue.
3. Verify zoning and licensing before you sign
The space must be legally usable for your activity, and this is on you to verify, not the landlord to volunteer. Zoning, occupancy, signage rules, health requirements for food, parking minimums: confirm with the municipality that your specific use is permitted at that specific address. A lease on a space you cannot license is still a lease you owe.
4. Price the build-out honestly
Very few spaces are ready on day one. Get real quotes for the work before signing, and negotiate: landlords regularly contribute to improvements through a tenant-improvement allowance or free-rent period, especially for longer terms. Every dollar of build-out is a dollar that must come back out of the till before the space is "cheap".
5. Choose location for your customers, not your ego
The right question is not "do I love it here" but "does my customer already pass this door". Visit at your actual business hours, count foot traffic, check who the neighbors are and what they attract. For businesses whose customers never visit, service, online, production, paying for a prestige address is renting a compliment.
And a closing rule that has saved more first businesses than any negotiation trick: rent the space your current revenue survives, not the one your projection justifies. You can always move up; moving down usually happens too late.
Leases are binding legal documents. Have a lawyer review before signing: it is one of the cheapest expensive-mistake preventions a young business can buy.
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