Commercial lease transactions are much more complex than residential leases. To ensure that you don't miss an important step, refer to this checklist throughout the process.
1. Start Early
Begin this checklist as soon as you can. Beginning 6 months to a year before you're ready to move in will ensure that you have enough time to make an informed, careful decision.
2. Choose a Tenant Rep Broker
A tenant rep broker represents you during the entire process. Having one by your side can help you get the best possible deal and gain access to in-demand spaces. Their fees are paid by the landlord, so hiring one won't add extra costs to the process.
3. Determine Your Needs
Think carefully about what you need in an office space, taking into consideration both your company's current situation and the potentials for the future.
4. Conduct Research
Get to know the area where you're considering locating your business. Find out what the going rental rates are and what service businesses are located in the neighborhood. Peruse the directory to meet the neighbors, and Google the landlord to find out about their reputation.
5. Inquire About CAM
Common Area Maintenance fees (CAM) are assessed to you in addition to rent to cover the cost of maintaining shared spaces in the building. You'll need to know how much this fee is and find out how the landlord calculated the number.
6. Tour With a Client in Mind
As you tour potential buildings and offices, put yourself in the shoes of an important client. Think about what type of impression your surroundings give you about your company and decide whether or not that's in line with your brand image.
7. Revisit the Building
Come back to the office building at different times of the day and on varying days of the week to see how crowded the parking lots, lobbies and elevators are.
8. Check the Contract for Key Clauses
Make sure that you read the entire real estate contract a couple of times. Then, pay extra attention to these key clauses:
-
Rent escalations, which tell you when and how much your rent will increase
-
Maintenance, which lets you know who is responsible for covering various costs
-
Use and Exclusives, which indicates what lines of business you can be involved in and could guarantee that you can be the only business in your industry located in the building
9. Ask Important Questions
Before you sign, make sure you know the answers to these questions:
-
Are we able to sublease your space?
-
How many parking spaces are allotted to us?
-
What type of signage are we allowed?
10. Negotiate
Don't make the mistake of viewing a commercial lease as a final document. Negotiating is expected when you're renting office space. Go into negotiations with your demands prioritized. If you have a lot of big requests, figure out if you can potentially offer to sign for a longer term as a concession to the landlord.
Here are a few other articles we think you'll enjoy:
Subscribe to our blog for more CRE tips!!
