Before you start searching for the perfect commercial property rental for lease for your small business,you should to get educated about the commercial real estate leasing process. Being ready should keep you from making hasty decisions and costly mistakes thatyou will regret in the future. The following are some insider suggestions to help make an informed choice when leasing a commercial space your company
Start the process of finding commercial rental space at least 6-12 months before your current lease terminates or before your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will require some type of modifications which the time needed will depend on the scope of work.
Thoroughly analyze your business’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial space terms and meanings. Various landlords say and quote things differently. If you’re in doubt about what they mean do not be afraid to ask them to get more info.
If you’re not knowledgeable about the commercial rental process or the present market conditions then consider engaging the help of a tenant representative such as Austin Tenant Advisors. Their services do not cost you anything because landlords compensate all the leasing commissions. The landlord representative will have an experienced listing agent advising them so it would be a great idea for you to have one too.
Physically visit all the spaces that meet your needs 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 reps a lot of questions about the ownership,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 needs: continue looking until you have at least 2 to 3 alternative choices. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you will gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to whether the discussions to your first choice fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever want to have a landlord representative’s verbal word. Everything should 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 consider include the size of this distance,the inquiring base rental rates,the required lease term,and the incremental expenses (taxes,insurance,maintenance,etc). You can also take note about the advantages and disadvantages 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 eliminating those that are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial spaces require 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 learn just how much out of pocket you will need to pay above and beyond what the landlord 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 extra concessions. Make sure you fully 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 thatyour business cannot live up to.
After discussions are finalized and you have 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. For those who have a tenant agent then they could review the lease with you also. Industrial 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.
When the end of lease contract negotiations has ended the landlord will supply you a draft of the lease to sign.
There are many more things to consider when renting commercial property however these ideas will help get you going. If you’re a new company renting commercial space for the first time or an current company who has just rented 1 or 2 spaces then consider getting help from a tenant representative. Their services do not cost you anything and you will save a great deal of money and time.