Before you begin looking for a good commercial real estate space to lease for your software company,you need to get educated about the commercial space leasing procedure. Being prepared should help prevent you from making hurried decisions and costly mistakes thatyou will probably regret later on. Below are some insider suggestions to help make an informed choice when leasing a commercial real estate your company
Start the process of hunting commercial space at least 6-12 months before your current lease expires or until your ideal move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some sort of improvements which the time required 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 acquainted with the commercial real estate terms and meanings. Different landlords state and quote things differently. If you’re in doubt about what they mean do not be afraid to ask them to get more info.
If you’re not familiar with the commercial rental process or the present market conditions then consider engaging the help of a tenant representative such as Austin Tenant Advisors. Their services do not cost you anything because landlords compensate all of the leasing commissions. The landlord rep will have an expert listing agent advising them so it would be a great idea for you to have one too.
Personally tour all of 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 agents a lot of questions regarding the ownership,property amenities,required lease duration,how much the landlord is prepared to give in tenant improvement allowances,etc..
Do not settle for the first commercial properties you believe is acceptable for your requirements: continue looking until you have at least 2 to three other choices. These extra options will work to your benefit since you will know what to expect during the lease negotiations and you will gain more leverage with multiple landlords competing for your company. They also give you something to fall back to whether the discussions to your first choice fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You never need to have a landlord representative’s verbal word. Everything needs to 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 every property. A few of the things you should consider 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 pros and cons of each property. If you’re budget conscious then you can quickly narrow down the list by simply 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 industrial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces need tenant improvements then it is important that you determine what improvements you want on each and get preliminary bids. 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 examine and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate extra concessions. Be certain you fully understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After discussions 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 also. Commercial lease language can 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 landlord will provide you a copy of the lease to review and sign.
There are many more things to consider when leasing commercial real estate however these suggestions will help get you going. If you’re a new company leasing commercial property for the first time or an current company who has only rented one or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you will save a lot of time and money.
