A good location is essential for a commercial tenant’s business success

The National Federation of Independent Businesses recently reported that an online survey revealed that small business owners are, by and large, optimistic about economic opportunities and conditions for 2015. Some 80 percent expect better sales in 2015 than last year. Undoubtedly, some optimistic Pennsylvanians might decide that the time is right to start a new business or expand an existing business.

Many retail business owners enter into a commercial lease for space where they can conduct business. One key decision that a retail business owner needs to make is where he or she will set up shop. Entrepreneur magazine observes that, if you are a commercial tenant who is going to be operating a brick-and-mortar business serving retail customers, the three most important decisions you will ever make "are location, location and location."

Obviously, a careful consideration of a site for your retail business is absolutely critical. Although a retail business owner needs a first rate product to sell, he or she also needs people streaming in the door to buy that product.

According to Entrepreneur magazine, the location you select should be as close to your competitors as possible. Your competitors have chosen their locations based on prior research aimed at determining the ideal demographics of a particular area. Moreover, these competitors have already spent lots of advertising dollars geared toward driving traffic to those locations. By locating in close proximity to those competitors, you take free advantage of your competitor's demographic research and the customer traffic they have generated.

Once you have selected a location that works, negotiating a lease is the next order of business. QSR magazine notes that, for many tenants, negotiating a good lease or a lease renewal against an experienced landlord-or the landlord's real estate agent or broker-can be quite a challenge. Never forget that "savvy real estate agents and brokers are specialized sales people." Their job is to sell tenants on leasing their location at the highest possible rental rate.

Negotiating tips

In addition to negotiating a favorable rent and lease term, commercial tenants should insist on lease provisions which protect their long-term business interests. The U.S. Small Business Administration advises that a tenant should try to include in a lease a specific clause giving it the undeniable right to sublet its space to another business. Such a clause would give the tenant flexibility in the event it decided to close the business or move to a new location. Second, tenants should insist on including an exclusivity clause in the lease which would prevent the landlord from leasing other spaces on the property to direct competitors.

Third, if a tenant is going to be renting space in a mall or shopping center that contains a major anchor tenant, the lease should contain a provision stating that, if an anchor store relocates or closes its doors, the tenant can break the lease if the landlord cannot replace the anchor store within a specified time period. Such a provision protects tenants from a possibly catastrophic loss of customer foot traffic.

Seeking legal help

If you are thinking about entering into a commercial lease, you should contact a Pennsylvania attorney experienced at handling real estate matters. The attorney can walk you through the clauses and fine print contained in the lease with the goal of protecting your interests.