Before you start searching for the perfect for your business, you must to get educated about the commercial real estate leasing process. Being ready will help prevent you from making foolish decisions and costly mistakes you will end up regretting later on. Below are some insider suggestions to help make an informed choice when renting a commercial space your business
Initiate the process of locating commercial real estate for lease at least 6-12 months before your current lease expires or until your ideal move-in-date. Locating the right space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. Typically the spaces you like will require some sort of improvements which the time required will depend on the scope of work.
Thoroughly examine your company’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with the commercial property terms and meanings. Different landlords state and quote things differently. If you’re unsure about what they mean don’t be afraid to ask them to provide more info.
If you’re not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost you anything since building owners pay all of the leasing fees. The landlord representative will have an expert listing agent helping them so it would be a good idea for you to have one too.
Personally visit all of the spaces that meet your requirements so you can make a brief list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions about who owns the property, 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 space you believe is suitable for your requirements: continue looking until you have at least 2 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 will gain more leverage with numerous building owners 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 are not legally binding. You don’t ever need to have a landlord agent’s verbal note. 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 size of this distance, the inquiring foundation rental rates, the necessary lease term, and the incremental costs (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 eliminating those which are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial properties require improvements then it is important that you figure out what improvements you want on each and get construction bids. That way if the building owner is offering a tenant improvement allowance you will learn how much out of pocket you will need to pay over and beyond what the building owner is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to return to each landlord to negotiate extra concessions. Make sure you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in 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 offer you the first draft of this commercial rental contract.
Now it is time to reassess the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative 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 would like to propose new language now is the time to do so.
When the end of rental contract negotiations has ended the building owner will supply you a draft of the lease to review and sign.
There are many more things to consider when renting commercial property however these suggestions will help get you started. If you’re a new business renting commercial property for the first time or an current business who has only rented 1 or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a lot of money and time.