Before you begin looking for a good for your startup, you should to get educated about the commercial space leasing procedure. Being ready should keep you from making expeditious decisions and costly mistakes you will end up regretting later on. Below are some insider suggestions to help make an informed choice when letting a commercial property your business
Initiate the process of searching commercial space at least 6-12 months before your current lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will require some type of improvements that the time required will depend on the scope of work.
completely research your company’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with the commercial property terms and definitions. Different landlords state and quote things otherwise. If you’re in doubt about what they mean do not be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial real estate leasing process or the current market conditions then consider engaging the support of a tenant representative. Their services do not cost you anything since building owners compensate all of the leasing commissions. The landlord agent will have an experienced listing agent helping them so it would be a good idea for you to have one as well.
Physically tour all of the properties that meet your requirements so you can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions regarding the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant construction allowances, etc..
Don’t settle for the first commercial space you think is suitable for your requirements: continue looking until you have at least two to three alternative choices. These additional options will work to your advantage because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple building owners competing for your business. They also give you something to fall back to whether the discussions for your first choice fall through.
Send out proposals to your top three to five choices. These are not legally binding. You never need to have a landlord representative’s verbal word. Everything needs to be in writing.
To help you decide what property is best suited for your company, 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 this space, the inquiring base rental rates, the required lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the pros and cons 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 which are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial buildings require tenant finish-outs then it is important that you determine what changes you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you’ll have to pay above and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate additional concessions. Be certain you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord provide you the first draft of this commercial lease contract.
Now it is time to reassess the commercial lease contract. It would be wise for you to hire an attorney to review the lease. For those who have a tenant agent then they can review the lease with you also. Industrial lease language can be negotiated. If you do not like particular lease items or want to propose new language today is the time to do so.
When the end of lease contract negotiations has finished the landlord will supply you a draft of the lease to sign.
There are many more things to think about when renting commercial space however these ideas will help get you going. If you’re a new company renting space for the first time or an current company who has just leased one or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of time and money.