Before you begin looking for a good commercial space to lease for your law firm, you will need to get educated about the commercial space leasing procedure. Being prepared should keep you from making rash decisions and costly mistakes thatyou will regret later on. The following are some insider tips to help make an informed choice when letting a commercial property your business
Initiate the process of searching for commercial space 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 will require 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will need some sort of modifications which the time needed will depend on the scope of work.
Thoroughly analyze your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with allthe commercial property terms and definitions. Different landlords say and quote things differently. If you are unsure about what they mean do not be afraid to ask them to supply more info.
If you are not knowledgeable about the commercial rental process or the present market conditions then consider engaging the assistance of a tenant rep such as AustinTenantAdvisors. Their services do not cost anything since landlords compensate all the leasing commissions. The landlord agent will have an expert listing agent helping them so it would be a good idea for you to have one too.
Physically visit all the properties that meet your requirements 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 reps a great deal of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you believe is suitable for your requirements: continue looking until you have at least 2 to three other choices. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your company. They also give you something to fall back to whether the discussions for your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You never 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 business, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you should consider include the size of the space, the asking base rental rates, the required lease duration, and the incremental costs (taxes, insurance, maintenance, etc). You can also 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 over your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial property need changes then it’s important that you figure out what improvements you want on each and get construction bids. That way if the landlord is offering a construction allowance you will know just how much out of pocket you’ll need to pay over and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to return to every landlord to negotiate extra concessions. Be sure you completely understand the total expenses you are expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business can’t live up to.
After discussions are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of the commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent then they could review the lease with you as well. Industrial lease language could be negotiated. If you do not like particular lease items or would like to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the landlord will provide you a draft of the lease to review.
There are many more things to consider when renting commercial real estate however these ideas will help get you started. If you are a new business renting space for the first time or an existing business who has just leased 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of money and time.