Before you begin looking for the perfect commercial property rental to rent for your small business,you need to get informed about the commercial real estate leasing process. Being prepared should keep you from making hurried decisions and costly mistakes thatyou will regret in the future. The following are some insider suggestions to help make an informed decision when renting a commercial property your business
Initiate the process of locating commercial space at least 6-12 months before your existing lease terminates or before your perfect move-in-date. Finding the perfect space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some sort of modifications that the time required will depend on the scope of work.
completely examine your company’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with allthe commercial space terms and meanings. Various landlords state and quote things differently. If you are in doubt about what they mean do not be afraid to ask them to get more info.
If you are not knowledgeable about the commercial rental process or the present market conditions then consider engaging the support of a tenant representative such as AustinTenantAdvisors. Their services do not cost anything since building owners pay all the leasing commissions. The landlord rep will have an knowledgable listing agent representing them so it would be a good idea for you to have one as well.
Personally visit all the properties that meet your needs so thatyou can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents 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..
Do not settle for the first commercial properties you think is suitable for your needs: continue looking until you have at least 2 to 3 alternative choices. These extra options will work to your advantage since you will know what to expect throughout the lease negotiations and you will gain more leverage with multiple building owners competing for your business. 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 need to take a landlord agent’s verbal word. 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 need to put into consideration include the size of this space,the asking foundation rental rates,the necessary lease term,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 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 above your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If any of the commercial properties need tenant improvements then it is crucial that you figure out what improvements you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will need to pay above and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to go back to each landlord to negotiate extra concessions. Be certain you completely 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’ve made your selection now it is time to have the landlord provide you the first draft of this commercial rental contract.
Now it is time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant agent then they could review the lease with you as well. Commercial lease language could be negotiated. If you do not 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 ended the building owner will provide you a copy of the lease to review and sign.
There are many more things to think about when renting commercial property however these ideas will help get you going. If you are a new company renting commercial space for the first time or an existing company who has only leased 1 or 2 spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you will save a lot of money and time.