Before you start searching for an excellent commercial property rental for rent for your startup company,you will need to get informed about the commercial real estate leasing procedure. Being ready should prevent you from making expeditious decisions and costly mistakes thatyou will end up regretting in the future. The following are some insider tips to help make an informed decision when leasing a commercial property your business
Start the process of hunting for commercial space at least 6-12 months before your current lease expires or before your ideal move-in-date. Locating the correct space and negotiating the deal will require 1-2 months depending on the size space and current market conditions. Typically the spaces you like will require some type of tenant improvements that the time required will depend on the scope of work.
completely analyze your company’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with the commercial property terms and meanings. Various landlords say and quote things otherwise. If you’re unsure about what they mean don’t be afraid to ask them to supply more information.
If you’re not knowledgeable about the commercial rental process or the current market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost anything since landlords pay all of the leasing commissions. The landlord agent will have an knowledgable listing agent helping them so it would be a great idea for you to have one also.
Personally visit all of the spaces that meet your needs so thatyou can make a brief list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions about who owns the property,property amenities,required lease duration,how much the landlord is willing to give in tenant improvement allowances,etc..
Do not settle for the first commercial space you believe is suitable for your needs: continue searching until you have at least 2 to three alternative choices. These extra options will work to your advantage since you will know what to expect throughout 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 if the negotiations to your first choice fall through.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever want to have a landlord agent’s verbal word. Everything should be in writing.
To help you decide what property is most suitable for your business,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 dimensions of the space,the asking foundation rental rates,the required lease duration,and the incremental costs (taxes,insurance,maintenance,etc). You can also take note about the pros and cons of each property. If you’re budget conscious then you can quickly narrow down the list by calculating the monthly base rents for each property then eliminating 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 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 over 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. Make certain you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord provide you the first draft of the commercial rental contract.
Now it is time to reassess the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they can review the lease with you also. Commercial lease language can be negotiated. If you don’t like certain 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.
There are several more things to think about when renting commercial property however these tips will help get you started. If you’re a new business renting space for the first time or an current business who has just leased one or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a great deal of time and money. To learn how to calculate warehouse space cost click here.