Before you begin looking for the perfect Sonoma wine tasting for your startup, you should to get informed about the commercial property leasing process. Being prepared should prevent you from making foolish decisions and costly mistakes thatyou will come to regret later on. Below are some insider suggestions to help make an informed decision when leasing a commercial space your business
Start the process of searching for commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal will require 1-2 months depending upon the size area and current market conditions. In most cases the spaces you like will need some type 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 in addition to some key employees.
Get acquainted with allthe commercial property terms and definitions. Different landlords say and quote things otherwise. If you are unsure about what they mean don’t be afraid to ask them to provide more information.
If you are not familiar with the commercial leasing process or the present market conditions then consider engaging the assistance of a tenant rep. Their services don’t cost you anything because landlords pay all the rental commissions. The landlord representative will have an expert listing agent advising them so it would be a good idea for you to have one also.
Physically visit all the properties that meet your requirements so thatyou can make a brief 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 who owns the property, property amenities, required lease duration, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial properties you think is acceptable for your requirements: continue looking until you have at least 2 to 3 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 numerous landlords competing for your tenancy. They also give you something to fall back to if the negotiations to your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever want to have a landlord agent’s verbal word. Everything needs to 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 every property. Some of the things you should put into consideration include the dimensions of this distance, the asking base rental rates, the required lease duration, 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 calculating the monthly base rents for each property then removing those that are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial properties need tenant improvements then it’s important that you determine what improvements you want on each and get preliminary bids. This way if the building owner is offering a construction allowance you will learn just how much out of pocket you’ll have to pay over and beyond what the building owner is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate extra concessions. Make sure you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After negotiations are finalized and you have made your selection now it’s time to have the landlord offer you the first draft of this commercial rental contract.
Now it’s time to review 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 can review the lease with you as well. Industrial lease language can be negotiated. If you don’t like particular lease items or want 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 draft of the lease to review.
There are many more things to think about when renting commercial property however these suggestions will help get you started. If you are a new company renting commercial space for the first time or an existing company who has just leased one or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you’ll save a great deal of money and time.