Commercial Property Lease Lagos Nigeria - Free Commercial Real Estate Lease Tips

commercial property lease lagos nigeria africa

Commercial property lease Lagos Nigeria - Commercial real estate lease is very similar to residential apartment lease in that both are lease transactions involving a tenant offering to pay a certain amount to a property owner for use of his property for a certain time period.

However, commercial property lease in Lagos Nigeria differs from residential apartment lease in three key aspects.

1. The rental price

2. The duration of the lease and

3. The legal lease agreement

Let's deal with the key areas mentioned above to appreciate issues with commercial real estate lease.

Commercial Real Estate Lease - An Overview

Commercial property lease tend to be more expensive than residential apartment lease because, more often than not, commercial properties are in strategic locations. Therefore they attract higher rental prices.

Consequently, when you compare the total cost of the lease of a commercial property with that of a residential property in the same neighourhood, you will find the prices are miles apart.

The second concern is the duration of the lease.

Residential apartment owners customarily demand two years rent from new tenants. The same applies to commercial real estate lease.

In addition to this, the property owner may also require his tenants to pay . . .

refundable caution fee or security deposit (refundable on exit from the property)

service charge, in situations where the property is serviced and

legal fee (otherwise called agreement fee)

All three requirements above also apply to residential apartment lease.

However, many commercial property owners are beginning to show a trend, which may become more prominent in the years to come.

Many of these commercial property owners are beginning to ask for rental payments of 3-5 years for commercial property lease.

This means that if you're an organization or business exploring commercial real estate lease options in Lagos Nigeria, you may see yourself paying more than you originally bargained for.

The good news is this . . . majority of commercial real estate owners are still content with collecting two years rent. Therefore you still have a good chance of meeting a property owner who will accept two years rent from you or your business.

Legal Agreement Between The Owner And The Tenant

The procedure for renting an apartment in Lagos Nigeria, commercial or residential, is as follows:

1. Contact Lagos Nigeria real estate agent

2. Inspect property recommended by estate agent

3. Meet the owner, if you like the property

4. Pay for property

5. Sign the lease agreement

6. Prepare the property (e.g. cleaning, painting if necessary etc)

7. Move in

Notice that the signing of the lease agreement comes after payment for the property in the list above.

That is exactly what individuals do . . . they pay for the property before even sighting the lease agreement presented by the owner.

If you're a business getting into commercial property lease, be sure to read the lease agreement and understand the terms before making payment for the property.

Remember that the agreement is binding after you sign your business to it. So, be sure to read it and agree to the terms before committing cash to the transaction.

Of course, after you pay for the property, both parties will then sign the lease agreement.

Leverage Your Cost With Long Lease

While long commercial property lease may not be the ideal option for most businesses, it may be the perfect solution for others.

For example, if you run a restaurant, school business, or any such business that requires substantial capital to begin or one with a clientele located within a geographical area, it may make perfect sense to secure that location for a much longer time than two years.

For instance, when a school located within a particular area relocate its premises, they often lose a sizeable number of their students. The same applies to a fast food joint located in a central commercial hub. Relocating the fast food business may sometimes mean starting from scratch again. Not the kind of dream that makes a businessman happy.

In this particular situations, long lease may benefit your business in two significant ways:

1. It gives you sufficient time to recover your overhead costs and become profitable and

2. It locks down the rental price of the house year on year for the duration of the lease

About rental price lock-down.

Many people in Lagos Nigeria will tell you that rental price increase at a rate of about 10-15 percent year on year.

This does not mean landlords or home owners take 10-15 percent price increase every year. What they do is to increase prices every two to four years. But when you work this price increases backward, you will find it translates to 10-15 percent price increase year on year.

Therefore, when you take a long lease of 5-10 years on a property, you lock down the price of that property within that time frame. Hence, the property owner cannot legally increase the rent of the house. This saves you good money.

Another good thing about long commercial real estate lease is this . . . property owners are usually willing to accept lower rent from long commercial real estate lease tenants because this class of tenants provide them much needed investment capital for their next investment or capital to off-set a mortgage payment for their new property.

This is a true win-win situation!

Should you go for long commercial property lease?

It's up to you.

If your business profitability and sustainability depends on it, then go for it.

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