Before you start looking for an excellent for your small company, you will need to get informed about the commercial space leasing process. Being ready should help prevent you from making expeditious decisions and costly mistakes thatyou will end up regretting in the future. The following are some insider suggestions to help make an informed decision when letting a commercial property your company
Initiate the process of searching for commercial space at least 6-12 months before your existing lease terminates or until your perfect move-in-date. Locating the correct space and negotiating the deal alonewill require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some sort of changes that the time needed will depend on the scope of work.
Thoroughly examine 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 differently. If you are unsure about what they mean do not be afraid to ask them to get more info.
If you are not knowledgeable about the commercial property leasing process or the present market conditions then consider engaging the support of a tenant rep. Their services do not cost anything because building owners pay all the leasing commissions. The landlord rep will have an knowledgable listing agent helping them so it would be a good idea for you to have one as well.
Physically visit all the properties that meet your needs so thatyou can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot 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..
Do not settle for the first commercial properties you think is suitable for your needs: continue searching until you have at least two to 3 other choices. These additional options will work to your benefit since you will know what to expect throughout 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 fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You never need to take a landlord representative’s verbal note. Everything needs to be in writing.
To help you decide what property is most suitable for your company, prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you should put into consideration include the dimensions of this space, the inquiring base rental rates, the required lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons 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 which are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial spaces need tenant improvements 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 know how much out of pocket you will have to pay above and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to return to each landlord to negotiate extra concessions. Be certain you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a certain 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’ve 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 reassess the commercial lease 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. Commercial lease language could be negotiated. If you do not like particular lease items or want to propose new language today is the time to do so.
Once the end of lease contract negotiations has ended the landlord will give you a draft of the lease to sign.
There are several more things to consider when leasing commercial property however these ideas will help get you started. If you are a new company leasing commercial property for the first time or an existing company who has just rented 1 or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you will save a lot of time and money.