Before you begin searching for the perfect commercial real estate space to rent for your small business,you should to get informed about the commercial office leasing procedure. Being prepared will keep you from making rapid decisions and costly mistakes thatyou will probably regret in the future. The following are some insider tips to help make an informed choice when letting a commercial office space your business
Start the process of locating commercial space for rent at least 6-12 months before your existing lease terminates or until your ideal move-in-date. Finding the correct 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 improvements that the time required will depend on the scope of work.
completely research your company’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with allthe commercial property terms and definitions. Various landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to provide more information.
If you are not familiar with the commercial rental process or the present market conditions then consider engaging the help of a tenant rep. Their services do not cost you anything since building owners compensate all of the leasing commissions. The landlord agent will have an expert listing agent representing them so it would be a great idea for you to have one as well.
Personally see all of the properties that meet your needs so thatyou can make a brief list. Bear in mind that the designs 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 term length,how much the landlord is prepared to give in tenant construction allowances,etc..
Don’t settle for the first commercial space you believe is acceptable for your needs: continue looking until you have at least two to three alternative choices. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you will gain more leverage with multiple building owners competing for your company. They also give you something to fall back to if the negotiations to your first choice go sideways.
Send out proposals to your top three to five choices. These aren’t 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 company,prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you need to consider 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 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 over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial properties need tenant finish-outs then it is important that you figure out what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you will 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 return to each 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 cannot live up to.
After negotiations are finalized and you have made your selection now it’s time to have the landlord offer you the first draft of this commercial lease contract.
Now it’s time to review the commercial lease contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant agent then they can review the lease with you as well. Commercial lease language can be negotiated. If you do not like certain lease items or want to propose new language now is the time to do so.
Once the end of lease contract negotiations has finished the building owner will give you a draft of the lease to sign.
There are several more things to think about when renting commercial real estate however these tips will help get you started. If you are a new company renting space for the first time or an existing company who has just rented 1 or two spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you will save a lot of money and time. To learn how to calculate warehouse space cost click here.