Before you start searching for the perfect commercial property to lease for your company, you should to get informed about the commercial property leasing process. Being ready will keep you from making hurried decisions and costly mistakes you will end up regretting in the future. Below are some insider suggestions to help make an informed decision when letting a commercial space your business
Initiate the process of searching for commercial space at least 6-12 months before your current lease expires or before your ideal move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some type of modifications that the time required will depend on the scope of work.
Thoroughly research your company’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with the commercial real estate terms and meanings. Various landlords say and quote things differently. If you’re unsure about what they mean do not be afraid to ask them to provide more information.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the assistance of a tenant agent such as AustinTenantAdvisors. Their services do not cost anything because building owners compensate all of the rental fees. The landlord rep will have an experienced listing agent advising them so it would be a good idea for you to have one as well.
Personally see all of the properties that meet your requirements 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 reps 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..
Don’t settle for the first commercial space you believe is acceptable for your requirements: continue looking until you have at least 2 to 3 other choices. These additional options will work to your benefit because you will know what to expect throughout the lease negotiations and you will gain more leverage with multiple building owners competing for your business. They also give you something to fall back to if the discussions for your first choice go silent.
Send out proposals to your top three to five choices. These are not legally binding. You never want to have 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 each property. A few of the things you should consider include the size of this space, the inquiring base rental rates, the required lease term, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages 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 which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenses then dividing by 12.
If any of the commercial properties need improvements then it’s important that you figure out what improvements you want on each and get prelim construction bids. This way if the landlord is offering a construction allowance you will know how much out of pocket you will have to pay over and beyond what the landlord is prepared to give.
Carefully analyze 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 completely understand the total expenses you’re 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 offer you the first draft of this 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. If you have a tenant agent then they can review the lease with you also. Commercial lease language can be negotiated. If you do not like particular lease items or want to propose new language today is the time to do so.
When the end of lease contract negotiations has finished the landlord will supply you a draft of the lease to review.
There are several more things to think about when leasing commercial space however these suggestions will help get you going. If you’re a new business leasing space for the first time or an current business who has just rented 1 or 2 spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you will save a lot of money and time.