Before you begin looking for a great commercial real estate space for lease for your startup,you should to get informed about the commercial office leasing process. Being ready should prevent you from making foolish decisions and costly mistakes you will regret in the future. Below are some insider suggestions to help make an informed choice when leasing a commercial property your business
Initiate the process of locating commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the perfect space and negotiating the deal will require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some type of improvements which the time needed will depend on the scope of work.
completely examine your business’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with the commercial space terms and meanings. Different landlords say and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to provide more info.
If you are not knowledgeable about the commercial property leasing process or the present market conditions then consider engaging the help of a tenant rep such as Austin Tenant Advisors. Their services don’t cost anything since landlords pay all the leasing commissions. The landlord rep will have an professional listing agent representing them so it would be a good idea for you to have one as well.
Personally tour all the spaces that meet your requirements so you can make a short 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 regarding the ownership,property amenities,required lease term length,how much the landlord is prepared to give in tenant construction allowances,etc..
Don’t settle for the first commercial space you think is suitable for your requirements: continue looking until you have at least 2 to 3 alternative options. These additional options will work to your benefit because you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords competing for your company. They also give you something to fall back to whether the negotiations for your first choice go sideways.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever want 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 consider include the dimensions of the distance,the asking foundation rental rates,the required lease term,and the incremental expenses (taxes,insurance,maintenance,etc). It is also possible to take note about the advantages and disadvantages of each property. If you are 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 industrial space square feet from the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces need 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 learn just how much out of pocket you’ll need 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 return to each landlord to negotiate extra concessions. Make sure you completely understand the total expenses you are expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of the commercial lease contract.
Now it’s 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 could review the lease with you also. Industrial lease language could be negotiated. If you don’t like particular 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 building owner will give you a copy of the lease to sign.
There are many more things to consider when leasing commercial property however these suggestions will help get you started. If you are a new company leasing commercial property for the first time or an existing company who has just rented 1 or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a lot of time and money.