Before you begin searching for a good business space to rent for your startup,you must to get educated about the commercial property leasing process. Being ready will keep you from making expeditious decisions and costly mistakes thatyou will regret later on. The following are some insider tips to help make an informed choice when renting a commercial space your company
Start the process of searching for commercial space at least 6-12 months before your existing lease terminates or before your perfect move-in-date. Locating the right space and negotiating the deal alonewill take 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will require some sort of changes which the time required will depend on the scope of work.
Thoroughly research your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with allthe commercial real estate terms and definitions. Different landlords state and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to supply more info.
If you’re not familiar with the commercial rental process or the present market conditions then consider engaging the assistance of a tenant representative such as Austin Tenant Advisors. Their services don’t cost you anything because landlords pay all of the leasing 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 visit all of the properties that meet your requirements so thatyou can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions regarding the ownership,property amenities,required lease term length,how much the landlord is prepared to give in tenant improvement allowances,etc..
Do not settle for the first commercial properties you think is suitable for your requirements: continue searching until you have at least two to three alternative options. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords competing for your business. They also give you something to fall back to if the discussions to your first choice go silent.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever need to take a landlord representative’s verbal note. Everything should be in writing.
To help you decide what property is best suited for your company,prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you should put into consideration include the size of the space,the inquiring base rental rates,the required lease duration,and the incremental costs (taxes,insurance,maintenance,etc). It is also possible to take note about the pros and cons of each property. If you’re budget conscious then you can quickly narrow down the list by simply 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 and any operating expenditures then dividing by 12.
If any of the commercial buildings require tenant finish-outs then it is critical that you determine what changes you want on each and get construction bids. That way if the landlord is offering a tenant improvement allowance you will learn just 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 is logical to go back to each landlord to negotiate additional concessions. Be certain you completely understand the total expenses you’re 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 thatyour business cannot live up to.
After discussions are finalized and you have made your selection now it is time to have the landlord offer you the first draft of the commercial rental contract.
Now it is time to review the commercial rental contract. It would be advisable 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 would like to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the building owner will provide you a copy of the lease to review.
There are several more things to consider when renting commercial real estate however these tips will help get you going. If you’re a new company renting commercial property for the first time or an existing company who has only leased 1 or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a lot of time and money.