Before you start searching for the perfect business space for lease for your small company, you must to get educated about the commercial real estate leasing procedure. Being ready should keep you from making hasty decisions and costly mistakes you will probably regret later on. The following are some insider suggestions to help make an informed choice when renting a commercial space your company
Start the process of searching commercial space at least 6-12 months before your current lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal alonewill require 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will need some type of improvements which the time required will depend on the scope of work.
Thoroughly research your company’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 definitions. Various landlords state and quote things differently. If you’re unsure about what they mean don’t be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the help of a tenant representative such as AustinTenantAdvisors. Their services don’t cost anything since building owners compensate all of the leasing fees. The landlord agent will have an knowledgable listing agent representing them so it would be a great idea for you to have one also.
Physically visit all of the properties that meet your needs so you can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a great deal of questions about who owns the property, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you think is acceptable for your needs: continue looking until you have at least 2 to three other choices. These extra options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous building owners competing for your tenancy. They also give you something to fall back to if the discussions to your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You never want to have a landlord representative’s verbal note. Everything needs to 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 need to consider include the size of this space, the inquiring foundation rental rates, the required 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 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 by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial spaces need tenant improvements then it is 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 willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to each landlord to negotiate additional concessions. Make sure you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in 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. 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 certain lease items or want to propose new language today is the time to do so.
Once the end of rental contract negotiations has finished the building owner will give you a draft of the lease to review.
There are many more things to consider when renting commercial property however these tips will help get you started. If you’re a new business renting commercial space for the first time or an current business who has just leased 1 or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a lot of time and money.