Before you start looking for the perfect for your small company, you need to get educated about the commercial space leasing procedure. Being ready should help prevent you from making expeditious decisions and costly mistakes you will probably regret later on. The following are some insider suggestions to help make an informed decision when letting a commercial property your company
Start the process of hunting for commercial space for lease at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the perfect space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. Typically the spaces you like will need some type of modifications that the time needed will depend on the scope of work.
Thoroughly examine your business’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. 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 information.
If you are not familiar with the commercial real estate leasing process or the current market conditions then consider engaging the support of a tenant representative. Their services don’t cost anything because landlords pay all the leasing fees. The landlord rep will have an professional listing agent representing them so it would be a great idea for you to have one also.
Physically tour all the properties that meet your needs so you can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a great deal of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Do not settle for the first commercial properties you think is suitable for your needs: continue searching until you have at least 2 to 3 other choices. These additional options will work to your advantage since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple landlords competing for your tenancy. They also give you something to fall back to whether the negotiations to your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever want to have a landlord representative’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 each property. A few of the things you need to put into consideration include the dimensions of this distance, the inquiring base rental rates, the necessary 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 are budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then eliminating those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial spaces need tenant improvements then it’s important that you determine 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 over 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 sure you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might lead to you signing a contract your business can’t live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord provide you the first draft of this commercial rental contract.
Now it is time to review the commercial rental 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 as well. Industrial lease language could be negotiated. If you don’t like particular lease items or want to propose new language today is the time to do so.
When the end of rental 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 renting commercial property however these tips will help get you going. If you are a new business renting commercial space for the first time or an existing business who has just leased one or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a great deal of money and time.
