Leasing commercial space can be a complex process with many moving parts and various parties involved. It takes years of practice to learn all the intricacies of the business and how to be successful at finding the best locations at the best rates. We used our decades of experience to compile the list of tips below to help those looking for office or industrial space in today’s market.
1. Begin Your Search as Early as Possible
Locating the ideal space and securing a favorable lease can be a long drawn-out process. Depending on your particular space, amenity, and lease term requirements, the search and negotiations may take up a number of months.
Therefore, companies should start exploring the market up to a year in advance of their desired lease commencement date.
2. Hire a Tenant Representative
If there were only one thing you can do to make your search for office space successful, it would be to hire a tenant rep broker. These professionals are licensed brokers who work exclusively with tenants looking for space.
Tenant reps have a wealth of market and industry knowledge and will help with identifying the best potential properties, leading the negotiations with landlords, scheduling tours, and a lot more, all free of charge.
3. Know How Much Space You Actually Need
Oftentimes, companies end up leasing too much or not enough space. Determining what the right square footage of your space should be ahead of time can save you tons of headaches and cash down the road. There are office space calculators you can use. Your tenant rep can also help you determine the exact amount of space you should lease based on the number of employees and other parameters.
Companies anticipating future growth should consider asking the landlord for a right of first refusal clause, which would allow the tenant to lease any newly vacated space before it is offered to the general public.
4. Consider the Length of the Lease Carefully
The desired term of your lease should also be considered with care. While a long-term lease may come with a lower rental rate, you should only commit to it if your business is well established and you intend to operate in the market for the long run.
5. Prioritize a Concessions Wish List
While you are narrowing down a list of prospective locations, you should also prioritize the concessions on your wish list. Separating them into “must-haves,” “highly desired,” and “nice to have” can help you compare prospective lease offers and focus on the negotiations that promise the most of your deal-breaker perks.
6. Consult With Management and Employees
Before you begin your space search, you should talk to your managers and employees. They can help with invaluable insights to the size, location, and other characteristics of the space. Managers can help identify space inefficiencies that should be addressed at your new location. You can keep your employees happy by taking into consideration their amenity wish list.
7. Evaluate the Building’s Connectivity
While different building amenities may have different importance to each tenant, today everyone needs stable Internet access.
Compare each prospective property’s digital connectivity options including the wireless signal strength throughout the building. Don’t hesitate to involve your IT team when evaluating the tech characteristics of the various properties you are considering.
8. Get to Know the Property
When touring buildings, look beyond the actual space you will be occupying. Explore the lobby, hallways, restrooms, elevators, gyms, cafés, and any other amenities you will be using and paying for. Check out the parking lot and the outdoor walking and sitting areas. Find out who else is leasing space in the building to ensure you are in the “right” company.
9. Consider the Neighborhood
When searching for a house, most people give the neighborhood nearly as much consideration as the home itself. The same rule should apply in commercial real estate. When exploring prospective locations, look beyond the building characteristics and amenities. The area crime rate, access to major highways or public transportation, availability of nearby restaurants and professional services, and proximity to residential areas are just some of the factors that should be evaluated as a part of the due diligence process.
10. Get to Know the Landlord and Property Manager
Your leasing experience can quickly turn into a nightmare by an unprofessional landlord or property manager. Therefore, it is equally important to evaluate the professionals behind the building, not just the building itself. Talking to the other building tenants and reviewing the company’s online presence and reputation are two of the best ways to run an informal “background check” on your landlord and property manager.
11. Create Competition for Your Tenancy
If you can get multiple landlords to compete for your tenancy, you will have the upper hand in negotiations and will most likely walk away with a better deal.
When owners know that you are considering a few buildings, they are more willing to offer lower rental rates, higher tenant improvement allowances, and other favorable terms in order to win your tenancy.
12. Negotiate an Exit Strategy
Whether a start-up or a company with an established history, all tenants should try to negotiate a favorable exit strategy in their lease. One way to protect yourself against uncertainties is to ask for early termination and sublease options in your lease, both of which would allow you to dispose of the space at a minimal cost.
As no two lease deals are identical, you may find that some of these tips are more relevant to your specific situation than others. As always, it is best to hire a tenant rep broker, who will represent you free of charge throughout the entire leasing process and will only look out for your best interests, from the property search stage to the negotiations back-and-forth, and beyond.
Looking for Office Space? View our How to Find Office Space Course!