Before you begin looking for a good commercial property rental for rent for your startup company, you will need to get educated about the commercial office leasing process. Being ready will prevent you from making rash decisions and costly mistakes you will end up regretting later on. Below are some insider suggestions to help make an informed decision when leasing a commercial space your company
Initiate the process of locating commercial space for lease at least 6-12 months before your existing lease terminates or until your ideal move-in-date. Locating the correct space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. Typically the spaces you like will require some sort of improvements that the time required will depend on the scope of work.
completely analyze your business’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with the commercial property terms and definitions. Various landlords state and quote things differently. If you’re unsure about what they mean do not be afraid to ask them to get more info.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the assistance of a tenant representative such as AustinTenantAdvisors. Their services do not cost you anything since landlords compensate all the leasing commissions. The landlord representative will have an expert listing agent representing 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 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 term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you believe is acceptable for your needs: continue searching until you have at least two to 3 other choices. These additional options will work to your benefit since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous landlords competing for your business. They also give you something to fall back to whether the discussions for your first choice fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever want to have a landlord representative’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 should consider include the dimensions of the space, the inquiring foundation rental rates, the necessary lease term, and the incremental expenses (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 eliminating those that are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial spaces require tenant improvements then it’s 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 learn just how much out of pocket you’ll need to pay above 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 certain you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract your business can’t 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 lease contract.
Now it is time to review the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative then they can review the lease with you also. Commercial lease language can be negotiated. If you do not like certain lease items or would like to propose new language now is the time to do so.
Once the end of lease contract negotiations has finished the landlord will provide you a draft of the lease to review.
There are many more things to consider when leasing commercial space however these suggestions will help get you going. If you’re a new company leasing commercial space for the first time or an existing company who has only leased 1 or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you’ll save a lot of time and money.