Before you start looking for a great commercial space to lease for your startup company, you need to get informed about the commercial real estate leasing procedure. Being ready should help prevent you from making foolish decisions and costly mistakes you will end up regretting later on. Below are some insider tips to help make an informed choice when leasing a commercial real estate your business
Initiate the process of hunting commercial space at least 6-12 months before your existing lease expires or before your ideal move-in-date. Finding the right space and negotiating the deal will take 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will require some sort of improvements which the time required will depend on the scope of work.
completely analyze your company’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with allthe commercial real estate terms and definitions. Various landlords say 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 familiar with the commercial rental process or the present market conditions then consider engaging the assistance of a tenant rep such as Austin Tenant Advisors. Their services don’t cost anything since building owners compensate all of the leasing fees. The landlord representative will have an knowledgable listing agent helping them so it would be a great idea for you to have one also.
Physically tour all of the properties that meet your requirements so you can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions regarding the ownership, 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 looking until you have at least 2 to 3 alternative options. These additional options will work to your advantage since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous building owners competing for your company. They also give you something to fall back to if the negotiations for your first choice go silent.
Send out proposals to your top three to five options. These are not legally binding. You never need to take a landlord agent’s verbal note. 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 every property. A few of the things you need to put into consideration include the size of this distance, the asking foundation rental rates, the required lease duration, 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 removing those that are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial spaces require reconfiguring then it’s important that you determine what changes you want on each and get preliminary bids. This way if the building owner is offering a construction allowance you will learn just how much out of pocket you’ll need to pay above and beyond what the building owner is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to return to every landlord to negotiate additional concessions. Make certain you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord provide 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 representative then they can review the lease with you as well. Industrial lease language can be negotiated. If you don’t like particular lease items or would like to propose new language today is the time to do so.
When the end of lease contract negotiations has ended the building owner will give you a draft of the lease to review.
There are several more things to think about when renting commercial property however these suggestions will help get you going. If you’re a new business renting commercial property for the first time or an existing business who has just rented one or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you’ll save a great deal of money and time.