Before you begin searching for a great commercial property to rent for your startup,you should to get informed about the commercial real estate leasing process. Being prepared will help prevent you from making hurried decisions and costly mistakes you will regret later on. Below are some insider tips to help make an informed decision when leasing a commercial property your business
Initiate the process of locating 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 upon the size area and current market conditions. Typically the spaces you like will need some sort of tenant improvements that the time needed will depend on the scope of work.
completely examine your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial real estate terms and definitions. Different landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to supply more info.
If you are not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant rep such as AustinTenantAdvisors. Their services do not cost you anything since landlords pay all the rental fees. The landlord rep will have an expert listing agent helping them so it would be a good idea for you to have one also.
Physically see all the properties that meet your needs 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 reps a great deal of questions about who owns the property,property amenities,required lease duration,how much the landlord is willing to give in tenant construction allowances,etc..
Do not settle for the first commercial properties you think is suitable for your needs: continue looking until you have at least two to three other options. 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 multiple landlords competing for your business. They also give you something to fall back to if the discussions for your first choice fall through.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever want to take a landlord agent’s verbal note. 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 need to put into consideration include the dimensions of this space,the asking foundation rental rates,the necessary lease duration,and the incremental costs (taxes,insurance,maintenance,etc). You can also take note about the advantages and disadvantages of each property. If you are 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 over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial properties need tenant finish-outs then it’s crucial that you determine what changes you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you will have to pay over and beyond what the landlord is willing 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. Be sure you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract your business can’t live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord provide 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 could review the lease with you as well. Commercial lease language could be negotiated. If you do not like particular 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 building owner will supply you a draft of the lease to sign.
There are several more things to think about when renting commercial real estate however these suggestions will help get you going. If you are a new company renting commercial space for the first time or an current company who has only rented 1 or two spaces then consider getting help from a tenant rep. Their services do not cost you anything and you will save a great deal of time and money.