Before you start searching for a great for your startup, you must to get educated about the commercial property leasing procedure. Being ready will prevent you from making impulsive decisions and costly mistakes thatyou will regret later on. Below are some insider tips to help make an informed decision when renting a commercial property your company
Initiate the process of searching commercial space at least 6-12 months before your existing lease expires or until your ideal move-in-date. Finding the correct space and negotiating the deal will require 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some sort of improvements which the time needed will depend on the scope of work.
completely examine your company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with allthe commercial space terms and meanings. Different landlords state and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to supply more information.
If you’re not knowledgeable about the commercial leasing process or the current market conditions then consider engaging the support of a tenant rep. Their services don’t cost anything since building owners compensate all the leasing fees. The landlord rep will have an knowledgable listing agent advising them so it would be a great idea for you to have one also.
Personally visit all the spaces that meet your requirements so thatyou can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions regarding the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you believe is acceptable for your requirements: continue searching until you have at least 2 to 3 other options. These additional options will work to your benefit because you will know what to expect throughout the lease negotiations and you will gain more leverage with numerous building owners competing for your business. They also give you something to fall back to if the discussions for your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever want to take a landlord representative’s verbal note. Everything needs to be in writing.
To help you decide what property is best suited for your business, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you need to consider include the dimensions of the space, the inquiring base rental rates, the necessary lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages of each property. If you’re budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then removing those that are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial property need changes then it’s important that you figure out what changes you want on each and get preliminary bids. That way if the landlord is offering a construction allowance you will know just how much out of pocket you will need to pay above and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate extra concessions. Be certain you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business can’t live up to.
After discussions are finalized and you have made your selection now it’s time to have the landlord provide you the first draft of the commercial lease contract.
Now it’s time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you also. Commercial lease language could be negotiated. If you don’t like certain lease items or would like to propose new language now is the time to do so.
Once the end of lease contract negotiations has ended the landlord will give you a draft of the lease to review.
There are several more things to think about when leasing commercial real estate however these suggestions will help get you started. If you’re a new business leasing commercial property for the first time or an existing business who has only leased 1 or 2 spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you will save a great deal of money and time.