Renting or buying commercial property is a major move. Like it or not, mini-panic attacks or sleepless nights are part of the process, and every potential tenant will have fears and doubts – especially early on.
The good news is that you can avoid many common worries in the first place, when you do a line-by-line review of the lease. Sure, reading a commercial lease can be difficult and time-consuming, but the consequences of not reading it can be infinitely more unpleasant.
If worry and fear are keeping you up all night, here are 13 common doubts and how you can resolve them during the lease negotiation process:
- Signing the wrong type of lease. If you hear the term “standard business lease” you should know there isn’t such a thing. Many landlords and even some inexperienced attorneys will tell you otherwise, but always know leases are negotiable clause by clause.
- Not getting feedback or input from your employees on your space. It’s not like you’re the only one working in your new space. Take surveys from your staff and learn what’s valuable to them as well as your business.
- You won’t get the perfect space. Being attached to any one property puts you at a major disadvantage. Don’t get stuck on the idea that one space will determine the success of your business. Bottom line: You want to be where your clients are – make sure the location is convenient over sexy.
- Not speaking your mind. Ultimately it’s your business. Don’t be afraid to speak up if you feel you aren’t being heard.
- Not having the right help for your business. Choose a real estate broker or advisor who’s very experienced in commercial lease negotiations. Also, check references with other business owners, for specific feedback around lease negotiations.
- Rejecting a good offer out of emotion. Lease negotiation is a two-way street. Hear something you don’t like? Stay calm, take a deep breath before reacting. You should never reject a deal out of anger.
- Relying on the landlord’s word on what is (or isn’t) permitted. Get permission from the city or township zoning officer before entering lease negotiations. Your landlord may really believe what he tells you, but he’s not the one who makes that decision.
- Negotiating in “panic mode.” It’s so important to keep a level head whenever you’re negotiating. You have to keep an open mind and know that there are always creative options for any circumstance you’re in.
- Failing to “get it in writing”. Always get everything discussed away from the negotiation table in writing. Find a way to document in-person conversations with the landlord. Never agree to anything unless it’s written down.
- Signing a long-term lease without reasonable upgrades. It’s no surprise that most landlords prefer that commercial tenants sign long-term (think 5 to 10 year long leases). It might be surprising, however, to know that you are able to ask for certain items in relation to the length of the lease, such as free rent for a period of time and/or an upgrade at the landlord’s expense.
- Not getting an “out” clause built into the lease. At the very least, you need an “option to sublease” and an “option to sell the business and assign.” Having a tenant rep by your side can help you determine what are reasonable requests.
- Not securing financial documents. Securing all bank statements and financial documents well ahead of time, before the lease negotiations, will help you out tremendously. You’ll know your budget and have that figure in your back pocket for any leverage, if it’s needed. Schedule time with your accountant, your loan officer, etc. to help get these documents in order.
- Trying to do everything on your own. Not getting professional help will put you at a major disadvantage. Seek the help of a trusted advisor in your area, who is experienced at lease negotiations, and who has the interests of your business at heart.
If any – or all – of these fears sound familiar, don’t fret. When you do your research and have the best support from a trusted advisor, you’ll be successful in getting the lease that’s right for you and your business. If you’re heading to the negotiation table soon, be sure to check out these 6 tips for getting a smooth real estate transaction.
Starting your own business is hard enough, but taking the plunge and moving into your first office space, can be even harder. Finding the perfect spot requires planning, patience and a solid team behind you. Though it can be overwhelming, I’d like to share six tips that can help you during the process:
- Time is of the essence: Often underestimated, you want to find a lease that fits your current needs and you’ll want to leave plenty of time to do this. Aim for a minimum of six to nine months before you’re ready to lease or purchase a space. Keep in mind that at least half a year’s time is essential to account for site selection, business term negotiations, attorney review, architectural design, and contracting the work/space build-out. If you’re stuck in a rut on where to start, seek out the advice from a trusted broker or advisor in your area. Especially when it comes down to negotiating for what you want and need, you should also arm yourself with information well in advance (here are few easy negotiation hacks you can try out yourself.)
- Make a list, check it twice: Once you have the location for your office, it’s time to set deadlines and make those checklists. This will help keep you accountable and on-track, because moving day comes faster than you think! Organize your paperwork – financial and tax documents should be at the top of your list. Other office necessities include supplies and amenities for you and your employees. Essentials like pens, paper, highlighters, as well as a water cooler, coffee maker and vending machine – have a plan on what to bring or what to buy.
- Lay it out: Be sure to spend time looking around the office before moving in – ideally four to five months before you’ll move. If it’s not already furnished, figure out what type of furniture you want to bring in. Consider what is going to fit your taste and work for your business. Get measurements to plan out desk and drawer space. It’s always a good idea to bring someone in to take a look and help you decide. If you have a tight budget, consider shopping for gently-used furniture on local classifieds or Craigslist. Websites like Furnishly and Chairish offer reasonable prices for furniture.
- Get connected: A strong internet connection is vital for any company. Before committing to one service, compare different providers and see which connection will best fit your company’s needs. Always look into all available plans and providers. Read contracts to avoid any strict cancellation fees and investigate options before choosing. Once you find a suitable provider, set a date for installation.
- Expect the unexpected: Even if something doesn’t go the way you planned, rule number one: Don’t panic. Look at the problem (maybe take a few deep breaths!), figure out how to solve it and learn from it. It’s impossible for everything to go as perfectly as planned, but it is possible to be prepared.
- Seek expert advice: Ultimately, it helps to have a team of trusted advisors on your side – particularly before touring any potential office locations. Seek out a trusted broker in your area – someone or a group who has the tenant’s best interests in mind.
If you’re looking into leasing or purchasing an office space, here are 3 easy steps to make sure you’re maximizing your commercial real estate dollar.