Commercial leases are contractual agreements that permit tenants to rent commercial properties from property owners.
The whole process of finding space & negotiating a commercial lease can be quite a lengthy and complicated process so it’s imperative that you know the market that you are in along with the steps needed to obtain it. To help ensure that you find the right space,avoid mistakes,and negotiate the best deal possible the following guide will help get you started.
#1 Give some thought to Obtaining Assistance From a Tenant Consultant
You can find and negotiate commercial space yourself however,if you don’t know the nearby market place and have not negotiated many commercial leases you will be at a disadvantage. Property owners retain the services of expert agents with lots of lease transaction experience to negotiate on their behalf to ensure they get the maximum lease prices and greatest lease terms possible. They may be professional however they are looking out for the landlord’s interest,never yours. Also,they only show you spaces in their portfolio.
Tenant reps only represent tenants,never ever property owners. This enables them to prevent conflicts of interest,show you every commercial space which will suit your needs,and give honest suggestions on your behalf. Having a tenant rep in your corner will give you access to the same market place information,tools,resources and experience as property owner agencies. From site selection,to negotiation,to occupancy a great tenant representative will educate you every step of the way. Their services are free to you since property owners pay their fee.
In a very reasonably competitive marketplace locating commercial space all on your own is not easy. Internet listings in many cases are inaccurate and out-of-date this means you will likely be wasting considerable time going after dead ends. Landlord agents are too occupied to return your calls particularly if you are renting small space.
Working with a tenant rep does not cost you anything so there is not any good reason to do this on your own. Property owner agencies will quote you the identical rate no matter whether you will have a tenant rep or not,and usually a very good tenant agent can produce leverage to negotiate an even better deal. They have got deal knowledge,know about available locations before they hit the market,as well as leverage broker connections for getting property owner agencies to return their phone calls much faster. The main thing you will save a bunch of money and time using their services.
#2 Figure Out Your Needs
It’s important that you make time to recognize your company’s culture and current and potential requirements. Within this assessment establish the right size,location,price range,timeline,in addition to growth needs. Always remember most leases tend to be 3-5 years long so it’s important that you do your best to plan and budget appropriately. If you are dealing with a tenant adviser they can help assist you through this process.
#3 Start Hunting For Commercial Space
If you are searching for commercial space without any help then start off searching on the internet for commercial spaces for lease. Loopnet and 42floors are an excellent place to start. It will also be a wise idea to be able to drive out and about and call on for lease signs and hopefully you can get the property owner agents to return your phone calls.
In case you are using a tenant adviser they then will do all the time consuming work for you of trying to find and determining the best areas that meet your needs. They are going to call each of the listing agencies,gather floor plans,pics,and so forth. and present you the best choices.Next they are going to schedule tours of all the spaces that made the shortlist and visit together with you providing you honest feedback and inside info about each property.
#4 Send Proposals to Landlord Representatives
By now you have narrowed it down to the locations that meet your most suitable size,area,as well as price range. Now it’s time to email proposals to the landlord agents. Never place all your eggs in a single basket,specially in a hot marketplace. Ideally you need to distribute no less than 2-3 proposals. This lets you make the landlords compete for your tenancy,but additionally will give you back ups in the event that one space becomes leased to a different renter. When you are leasing commercial space by yourself then you will have to write the proposals. Otherwise if employing a tenant adviser they then will write them for your benefit.
#5 Examine the Proposals
After 3-5 days you should begin acquiring responses to your proposals from landlord agents. To figure out the difference between each one you need to do a comprehensive lease analysis and do a comparison of each offer side-by-side. In case you hired a highly trained tenant representative they then are going to do the lease analysis on your behalf.
Make sure that you assess the total lease value,average month-to-month rent and effective leasing price across the time period to get an apples to apples contrast.
Generally property owners will provide a tenant construction allowance. To learn how far that allowance may go you want to receive preliminary construction estimates for every space. Afterwards it will be possible to evaluate all the difference between the allowance available and total finish out prices and see how much out of pocket you have got to come for each space.
#6 Finish Negotiating
Right now you should have all the details you need to intelligently work out primary deal points along with the business rental agreement.
You and your agent and your lawyer will negotiate with the landlord and the building owners attorney to ensure that you end up with the best lease rate and best terms and conditions attainable.
Once everyone agrees on the essential conditions and terms then the property owners attorney will draft a lease agreement for you to review. It’s crucial that you,your lawyer,plus your tenant advisor assuming you have one,thoroughly read the lease. Generating blunders in the lease contract could cost you thousands and thousands down the road so don’t short cut this. You should definitely realize what you are committing to as there are a number of commercial real-estate lease contract terms and conditions to know.
#7 Make The New Commercial Real-Estate Space Ready To Inhabit
When the lease contract is closed you can now commence the process of finishing out your space when necessary. For those who have a tenant rep they can recommend providers for instance designers,contractors,phone and data cablers,and so forth.
Conclusion
As you can see finding and negotiating commercial space can be a time consuming process and there are many mistakes that could be made if you don’t have help. Having your own representation does not cost you any money and does not have a negative effect on the deal you get. In fact you have a better chance of getting a better deal if you have a commercial real estate agency that specializes in representing tenants such asAustin Tenant Advisors.