How to Lease Commercial Property to Specialized Tenants
In commercial real estate leasing you will come across specialised tenants in different industries. They have special property needs and the selection process for the right property can be time consuming.
The lease documentation with these tenants needs to be structured to protect the landlord’s property from the business activities of the tenant. The tenant assumes a degree of responsibility and accountability under the terms of the lease. Health, environmental, and operational issues all need to be incorporated into the lease document.
Typically you will find that specialised tenants of this type will be similar to the following:
- Doctors in medical suites
- Medical specialists
- Dentists
- Laboratories
- Pathology services
- Some types of manufacturing, etc
From these groups it is necessary to consider the activities within the business type that need special consideration in the lease document. What you should be looking for will be:
- Threat to health and safety of people, tenants, or the general public
- Noise, dust, waste, etc
- Excessive energy demands and use
- Excessive property use and access
- Large volumes of people accessing or using the premises
- Environmental issues, and or contamination controls
- Health issues
- Public safety
- Waste products and run off
- Activities on site that could damage the building
- Hazardous goods storage or goods use
- Heavy machinery use or access
- Permitted and legal use of the land and buildings
- Compatibility and interaction with other tenants and property occupants nearby
- Chemical or heat related storage or manufacturing
- Business activities that invasive or a threat to the local area or general public, etc.
So the list can go on into many different factors of concern and the list will be driven by tenant types. The main point here is that you must understand the pressures that a tenant can bring to a property and then control those pressures with a quality lease document and occupancy strategy. Think about this:
- The make good clause in the lease may require special drafting to pick up the issues of damage and remediation at the end of the lease.
- The lease may also require renovation and remediation provisions mid-term to ensure that the property integrity is maintained.
When you have a tenant of this type it is necessary to inspect the property frequently to ensure that the tenant is complying with the terms of occupation. In that way you can stay well ahead of any problems and see them when they arise.
