Your Ultimate Guide to Commercial Leasing in Indianapolis

Finding the right space to support your growing business can be both exciting and daunting. But understanding what’s available and how to navigate the process is half the battle — and having a trusted voice advising you can improve your experience from start to finish.

Your Ultimate Guide to Commercial Leasing in Indianapolis

In this guide, we’ll delve into the nuances of the commercial leasing process in Indianapolis, covering crucial aspects like lease types, lease negotiation, and legal considerations.

Types of Commercial Leasing

When diving into commercial real estate, it helps to broadly understand different lease structures and consider which best serves your business. An experienced commercial real estate advisor will be able to help you navigate all types of commercial leases, but the most common commercial leasing structures include the following:

Full-Service Lease (Gross Lease)

Imagine you're renting a bike, and the rental fee covers everything, like a helmet, maintenance, and even a water bottle. In a full-service lease, the landlord covers all operating expenses, including maintenance, utilities, insurance, and property taxes. Tenants typically pay a fixed monthly rent, providing cost predictability and simplifying financial planning.

Net Lease

Let's say you want to rent a power washer. In a net lease, you pay to rent the power washer, but you also need to purchase extra stuff, such as gasoline or soap, separately. When you’re considering a net lease for your business, it means you pay for the place you're renting (the power washer), and you also pay for other aspects like maintenance, utilities, or property taxes (the extra stuff) based on the square footage you’re leasing.

Modified Gross Lease

A modified gross lease combines elements of full-service and net leases. This lease type is similar to renting a vacation property. You pay a fixed rent for staying there and an added fee for cleaning or online support. In commercial terms, tenants pay a fixed base rent plus a portion of the operating expenses, negotiated and agreed upon between the tenant and landlord.

Negotiating a Commercial Lease

Negotiation is a critical phase in the commercial leasing process, determining the terms and conditions that will define your occupancy. Engaging a commercial real estate services advisor can be your secret weapon to securing favorable lease terms as painlessly as possible. There are several negotiable aspects to consider when reviewing your lease:

1. Lease Term

Negotiate the length of the lease term to align with your business needs and growth projections. Pro tip: Longer-term leases often provide more favorable rates and stability.

2. Rent and Escalations

Discuss the base rent and any escalation clauses, ensuring clarity on how and when rent increases will occur over the lease term.

3. Tenant Improvements

Negotiate the scope and funding of tenant improvements to tailor the space to your specific requirements while fitting within your budget.

4. Renewal and Expansion Options

Consider negotiating options for lease renewal or expansion to accommodate future business growth without the hassle of relocating.

5. Termination Rights

Discuss termination rights and the associated penalties to provide flexibility in case your business circumstances change.

Legalities in Commercial Leases

Working with a commercial real estate services expert can remove the anxiety of handling legal complexities and Indiana-specific regulations to ensure a smooth and compliant leasing process. A great commercial broker can help you navigate a spectrum of considerations to feel secure and empowered when it’s time to sign on the dotted line.

Seek out a firm that can help you:

• Understand the big picture by reviewing the lease agreement to ensure compliance with both general legal principles and Indiana-specific laws. This review should encompass the lease's clauses, terms, and responsibilities.

• Build a better business by understanding and operating within Indianapolis's zoning laws and land use regulations. Different zones have specific permitted uses and restrictions; compliance is necessary to move forward!

• Stay in the know by assessing the environmental implications of the leased space and ensuring compliance with all applicable federal, state, and local environmental laws, especially focusing on state-specific requirements.

• Stay in the clear and prevent potential legal issues by ensuring that your business activities in the leased space adhere to the noise levels and nuisance restrictions stipulated by local ordinances.

• Protect your future by reviewing insurance and liability clauses in the lease agreement to prepare for any insurance requirements and liabilities you are expected to carry as a tenant and ensure they align with your risk management strategies.

Do I Need a Commercial Real Estate Broker?

The role of a commercial real estate broker in the leasing process is to step into your journey, understand your unique needs, and use industry expertise to give you an insider edge. And at Cresa, we mean it when we say we’re on your side. We exclusively represent tenants, which means that your best interest is our best interest. Our commitment is to empower you with knowledge and insight, allowing you to make informed decisions that align with your business goals. The perfect space is out there. We’re here to help you find it.