Before you start looking for a good commercial real estate space to rent for your startup company,you must to get informed about the commercial office leasing process. Being prepared will keep you from making impulsive decisions and costly mistakes you will probably regret later on. Below are some insider tips to help make an informed choice when leasing a commercial property your company
Initiate the process of searching commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending upon the size area and current market conditions. In most cases the spaces you like will need some type of improvements that the time needed will depend on the scope of work.
Thoroughly examine your business’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial real estate terms and meanings. Different landlords say and quote things differently. If you’re unsure about what they mean do not be afraid to ask them to provide 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 anything because building owners compensate all the rental fees. The landlord agent will have an knowledgable listing agent helping them so it would be a great idea for you to have one too.
Personally tour all the spaces that meet your needs so you can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions about the ownership,property amenities,required lease term length,how much the landlord is prepared to give in tenant construction allowances,etc..
Do not settle for the first commercial properties you believe is acceptable for your needs: continue searching until you have at least two to three other options. These extra options will work to your benefit since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous building owners competing for your tenancy. They also give you something to fall back to if the negotiations for your first choice go silent.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever need to take a landlord agent’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. Some of the things you need to consider include the dimensions of the distance,the inquiring foundation 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 calculating the monthly base rents for each property then removing those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial property need changes then it’s important that you determine what improvements you want on each and get prelim construction bids. That way if the landlord is offering a construction allowance you will learn just how much out of pocket you’ll have to pay over and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate additional concessions. Be certain you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord offer you the first draft of the 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 representative then they could review the lease with you as well. Industrial lease language could be negotiated. If you do not like certain lease items or want to propose new language now is the time to do so.
When the end of lease contract negotiations has ended the landlord will give you a draft of the lease to review.
There are many more things to consider when leasing commercial space however these tips will help get you started. If you’re a new business leasing space for the first time or an existing business who has only leased 1 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. To learn how to calculate warehouse space cost click here.