It is essential to consider all the factors when entering into a new lease agreement for industrial property. Once the lease contract has been signed, changing or re-negotiating is challenging.
The following aspects of a property lease transaction are fundamental:
- · Exactly what is being rented? (e.g. Factory/ Warehouse, offices, yard areas, etc.)
- · Are there any areas utilised by other users? (e.g. Shared yard areas).
- · Rentable area of premises. (The most commonly used formula is the SAPOA Method of Measuring Floor Areas.)
- · Exact use of the premises and facilities.
- · Date of Occupation of the property.
- · Lease start date.
- · The period of Lease.
- · Lease End Date.
- · Annual rental escalation.
- · Deposit required. (Deposits are non-vatable).
- · Renewal period (Terms & dates to be agreed upon to be Valid.)
- · Initial Rental. (Excl. Vat)
- · Other costs to be paid by the Tenant? (e.g. Security, Operating Costs).
- · How/ when do these costs escalate?
- · Consumption charges and how and when are these billed (e.g. Electricity, Water, Sewerage etc.)
Additional important items:
- · Obtain Suretyships (if applicable).
- · Any special/other requirements requested by the Tenant?
- · Confirm the tenant’s legal entity to prepare all FICA documentation required by the Landlord.
- · Tenant to permit to consent to a credit check by the agent or the landlord.
- · Acquire Resolutions where companies or trusts are legal entities.
- · What are the Lease/ Administration costs charged for drawing up the contract?
Practical aspects:
- · Power requirements?
- · Height/ stacking and racking requirements.
- · Fire regulation compliance (e.g., Sprinkler systems, etc.).
- · Insurances.
- · Loading, parking, paving, and turning circle requirements.
- · Flooring and lighting.
- · Staff facilities.
- · The timing of a move from previous premises.
- · Finally, cleaning up of former facilities.
If you have any questions or are unsure of any aspect of a transaction, please contact Epping Property for a confidential discussion. It pays to use an experienced industrial property broker to negotiate the best deal possible and to clarify aspects before a lease is signed. There are too many instances where parties, years later, try to decipher what intentions were when a rental agreement was signed.
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For further information and details, please contact Epping Property.
+27 (0)21-531-0026
Factors to consider when entering into a new lease
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