Before you begin searching for a good commercial space to lease for your company, you should to get informed about the commercial property leasing procedure. Being prepared will help prevent you from making hurried decisions and costly mistakes you will regret later on. Below are some insider tips to help make an informed decision when letting a commercial real estate your business
Initiate the process of hunting commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. Typically the spaces you like will need some type of improvements that the time needed will depend on the scope of work.
completely examine your company’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with the commercial property terms and meanings. Various landlords state and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to provide more info.
If you are not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the assistance of a tenant agent such as AustinTenantAdvisors. Their services don’t cost you anything since landlords pay all the leasing commissions. The landlord rep will have an expert listing agent representing them so it would be a good idea for you to have one also.
Physically tour all the properties that meet your needs so you can make a short list. Bear 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 the ownership, 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 think is suitable for your needs: continue searching until you have at least 2 to three alternative choices. These additional options will work to your benefit because you will know what to expect during the lease negotiations and you will gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to whether the discussions to your first choice fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You never want to have a landlord agent’s verbal word. Everything should be in writing.
To help you decide what property is most suitable for your business, prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you should consider include the size of this distance, the asking foundation rental rates, the necessary lease duration, and the incremental expenses (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 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 and any operating expenses then dividing by 12.
If any of the commercial property need changes then it’s important that you figure out what changes you want on each and get construction bids. This way if the building owner is offering a tenant improvement allowance you will know how much out of pocket you will need to pay over and beyond what the building owner is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate additional concessions. Be certain you fully understand the total expenses you are expected to cover. Don’t get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract your business can’t live up to.
After discussions 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 reassess the commercial rental 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 as well. Industrial lease language could be negotiated. If you don’t like certain lease items or would like to propose new language today is the time to do so.
When the end of rental contract negotiations has ended the building owner will supply you a copy of the lease to sign.
There are many more things to consider when leasing commercial property however these tips will help get you going. 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 will save a lot of time and money.