Before you start looking for a great business space to lease for your startup, you must to get educated about the commercial space leasing procedure. Being prepared will keep you from making rapid 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 leasing a commercial real estate your business
Initiate the process of finding commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Locating the perfect space and negotiating the deal alonewill take 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will need some sort of improvements which the time required will depend on the scope of work.
Thoroughly research your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with allthe commercial space terms and meanings. Various landlords state and quote things otherwise. If you’re in doubt about what they mean don’t be afraid to ask them to provide more information.
If you’re not familiar with the commercial rental process or the present 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 representative will have an knowledgable listing agent advising them so it would be a great idea for you to have one also.
Personally see all the properties that meet your requirements so thatyou can make a short 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 improvement allowances, etc..
Do not settle for the first commercial properties you believe is acceptable for your requirements: continue searching until you have at least 2 to three other options. These extra 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 company. 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 options. These are not legally binding. You never want to have a landlord agent’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. A few of the things you need to consider include the size of the space, the inquiring foundation rental rates, the necessary lease duration, and the incremental expenses (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 removing 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 plus any operating expenditures then dividing by 12.
If any of the commercial spaces need reconfiguring then it’s important that you determine what changes you want on each and get prelim construction bids. This way if the building owner is offering a construction allowance you will learn how much out of pocket you will have 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 makes sense to return to each landlord to negotiate additional concessions. Make certain you fully understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business cannot 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 the commercial lease contract.
Now it is time to reassess the commercial lease contract. It would be wise for you to hire an attorney to review the lease. For those who have a tenant agent then they could review the lease with you also. Commercial lease language could be negotiated. If you don’t like particular lease items or would like to propose new language today is the time to do so.
Once the end of lease contract negotiations has finished the building owner will give you a copy of the lease to review.
There are many more things to think about when renting commercial space however these suggestions will help get you going. If you’re a new company renting commercial property for the first time or an existing company who has just 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.