Before you start looking for the perfect commercial office for lease for your startup, you will need to get informed about the commercial space leasing process. Being ready will prevent you from making rash decisions and costly mistakes thatyou will end up regretting later on. The following are some insider tips to help make an informed choice when letting a commercial property your business
Initiate the process of searching commercial space at least 6-12 months before your current lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal alonewill require 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will require some sort of improvements which 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 in addition to some key employees.
Get familiar with the commercial real estate terms and definitions. Various landlords state and quote things differently. 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 help of a tenant rep such as AustinTenantAdvisors. Their services do not cost anything because building owners pay all the rental commissions. The landlord representative will have an professional listing agent helping them so it would be a good idea for you to have one as well.
Personally tour all the properties that meet your requirements so thatyou can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions about the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial space you believe is acceptable for your requirements: continue searching until you have at least 2 to three alternative options. These extra options will work to your benefit since 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 whether the discussions to your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You never need to have 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. A few of the things you should consider include the dimensions of the space, the inquiring foundation rental rates, the required lease term, and the incremental costs (taxes, insurance, maintenance, etc). You can also take note about the pros and cons 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 removing those which are way above your budget. The monthly base rent is calculated by multiplying the industrial 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. That way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will have to pay above and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to return to each landlord to negotiate additional concessions. Make certain 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 lead to you signing a contract thatyour business can’t live up to.
After discussions are finalized and you’ve made your selection now it’s time to have the landlord provide you the first draft of the commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative 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.
Once the end of rental contract negotiations has finished the building owner will supply 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 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 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 lot of money and time.