Before you start looking for a good Sonoma wine tasting for your business, you must to get informed about the commercial space leasing process. Being prepared should help prevent you from making impulsive decisions and costly mistakes thatyou will regret in the future. The following are some insider tips to help make an informed choice when leasing a commercial real estate your business
Start the process of hunting for commercial space for lease at least 6-12 months before your existing lease expires or before your ideal move-in-date. Locating the correct 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 require some type of tenant improvements that the time required will depend on the scope of work.
completely research 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 unsure about what they mean do not be afraid to ask them to provide more information.
If you’re not knowledgeable about the commercial rental process or the current market conditions then consider engaging the assistance of a tenant representative. Their services do not cost anything because landlords compensate all of the leasing commissions. The landlord agent will have an professional listing agent helping them so it would be a good idea for you to have one too.
Personally visit all of the spaces that meet your needs so thatyou can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives 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..
Do not settle for the first commercial properties you think is acceptable for your needs: continue looking until you have at least 2 to 3 alternative choices. These extra options will work to your benefit because you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your company. They also give you something to fall back to whether the discussions to your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever want to take a landlord representative’s verbal word. Everything needs to 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. Some of the things you need to put into consideration include the dimensions 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 removing those which are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial properties require tenant improvements then it is essential 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 know how much out of pocket you’ll have to pay above and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to every landlord to negotiate additional concessions. Make sure you completely 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’ve 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 review 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 could review the lease with you also. Commercial lease language could be negotiated. If you do not like certain lease items or want to propose new language now is the time to do so.
When the end of lease contract negotiations has ended the landlord will provide you a draft of the lease to review.
There are several more things to consider when renting commercial space 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 leased 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a great deal of time and money.