Before you start looking for a great business space to rent for your business,you need to get informed about the commercial property leasing process. Being ready should help prevent you from making foolish decisions and costly mistakes you will probably regret in the future. The following are some insider tips to help make an informed choice when leasing a commercial space your business
Initiate the process of hunting commercial space at least 6-12 months before your current lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some sort of improvements which the time needed will depend on the scope of work.
Thoroughly analyze your business’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with allthe commercial property terms and meanings. Various landlords say and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to supply more information.
If you’re not familiar with the commercial rental process or the current market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost anything because building owners compensate all the rental commissions. The landlord representative will have an knowledgable listing agent helping them so it would be a great idea for you to have one as well.
Personally visit all the properties that meet your needs so you 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 who owns the property,property amenities,required lease duration,how much the landlord is prepared to give in tenant construction allowances,etc..
Don’t settle for the first commercial properties you think is acceptable for your needs: continue searching 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 multiple building owners competing for your business. They also give you something to fall back to whether the negotiations for your first choice go sideways.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever need to have a landlord representative’s verbal word. Everything needs to be in writing.
To help you decide what property is best suited for your business,prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you need to consider include the size of the distance,the asking 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 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 some of the commercial spaces need tenant improvements then it is important that you determine what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you’ll need to pay over and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate extra concessions. Be certain you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might result in you signing a contract your business can’t 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 the commercial rental contract.
Now it’s time to review the commercial rental 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. Commercial lease language can be negotiated. If you don’t like certain lease items or want to propose new language today is the time to do so.
When the end of rental contract negotiations has ended the landlord will give you a copy of the lease to review and sign.
There are many more things to think about when renting commercial real estate however these tips will help get you going. If you’re a new business renting commercial space for the first time or an current business who has only rented 1 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. For more warehouse space lease tips click here.