Before you begin looking for the perfect for your small company, you must to get educated about the commercial space leasing procedure. Being prepared should help prevent you from making impulsive decisions and costly mistakes thatyou will come to regret later on. Below are some insider suggestions to help make an informed decision when renting a commercial real estate your company
Start the process of searching for commercial rental space at least 6-12 months before your existing lease terminates or until your ideal move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will require some sort of modifications which the time required will depend on the scope of work.
completely analyze your company’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial property terms and definitions. Different landlords state and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to supply more info.
If you are not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the help of a tenant agent. Their services don’t cost anything since landlords pay all of the rental commissions. The landlord rep will have an professional listing agent advising them so it would be a good idea for you to have one too.
Physically see all of the spaces that meet your needs so thatyou can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions about who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Do not settle for the first commercial space you believe is acceptable for your needs: continue looking until you have at least two to three alternative options. These extra options will work to your benefit because you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your tenancy. 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 never need to have 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 every property. A few of the things you need to put into consideration include the size of this space, the asking foundation rental rates, the required lease term, 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 calculating the monthly base rents for each property then eliminating those that are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces require 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 just how much out of pocket you’ll need to pay over and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate extra concessions. Make certain you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After discussions are finalized and you’ve made your selection now it’s time to have the landlord provide you the first draft of this commercial rental contract.
Now it’s time to reassess the commercial rental 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 as well. Commercial lease language can be negotiated. If you don’t like certain lease items or want to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the landlord will provide you a copy of the lease to review.
There are many more things to think about when renting commercial property however these tips will help get you started. If you are a new business renting commercial space for the first time or an existing business who has just rented one or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a great deal of money and time.