Before you start searching for an excellent for your startup, you need to get educated about the commercial property leasing procedure. Being prepared will help prevent you from making rapid decisions and costly mistakes thatyou will end up regretting later on. The following are some insider suggestions to help make an informed decision when letting a commercial real estate your business
Start the process of locating commercial space for lease 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 will take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some type of tenant improvements that the time required will depend on the scope of work.
Thoroughly research your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with the commercial space terms and definitions. Various landlords say and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to supply more info.
If you are not knowledgeable about the commercial property leasing process or the present market conditions then consider engaging the help of a tenant rep. Their services don’t cost you anything since landlords pay all of the leasing commissions. The landlord rep will have an professional listing agent representing them so it would be a good idea for you to have one as well.
Personally see all of 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 who owns the property, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your requirements: continue searching until you have at least 2 to three other options. 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 landlords competing for your business. They also give you something to fall back to whether the negotiations to 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 agent’s verbal word. Everything should 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 every property. Some of the things you need to consider include the dimensions of the distance, the asking foundation rental rates, the required lease duration, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages of each property. If you are budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then eliminating 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 spaces need tenant improvements then it’s important that you figure out what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will learn 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 every landlord to negotiate additional concessions. Be sure you fully understand the total expenses you are expected to cover. Don’t get emotionally attached to a specific property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business can’t live up to.
After negotiations are finalized and you’ve 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 review the commercial lease contract. It would be advisable 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 also. Commercial lease language could be negotiated. If you don’t like particular 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 building owner will supply you a draft of the lease to review.
There are many more things to consider when leasing commercial space however these suggestions will help get you started. If you are a new business leasing space for the first time or an existing business who has just rented 1 or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a lot of money and time.