by Mike Kushner, CCIM
There are many aspects of running a business that can be daunting to navigate. Finding and leasing the right commercial space that fits your needs (and your budget!) is absolutely one of them.
Unless your expertise is in real estate, you can’t be expected to know the market or understand how to negotiate lease terms like a professional. The good news is that having a tenant representative on your side can make the process a breeze. Even if you’re not planning to change locations right now, educating yourself on the basic process is always a smart idea.
There’s a lot of information floating around out there that can be quite confusing, so we prepared this crash course on the most important information to make finding your right space a little less challenging.
Step 1: Determine How Much Space You Need, and Where You Need It
It sounds pretty obvious that you’ll need to have an idea of your desired square footage before you begin to qualify properties. What’s not so obvious is all of the different factors that can contribute to what your perfect size is. Location is one of these variables. Sure, you want an office that’s convenient for your employees, but you may also need to consider what location is convenient for your clients and where your business will get the most visibility. For a retail business with a storefront, this is particularly important.
Additionally, you need to consider the space you need right now in contrast with the space you can reasonably expect to need in the future as your business grows. With the popularity of hybrid workspaces, you may want to prioritize a flexible floorplan that allows you to create an open and collaborative environment as staff come in and out of the office. Don’t forget to include any special needs like extra storage space, multiple conference rooms, co-working areas, etc. Carefully think about these details while designing your “ideal space” must-haves.
2. Survey the Market
Now that you have an idea of how much space you need and where you need it, you’re ready to get to know the current market. This is an important step because it provides you with the knowledge to negotiate smartly, including the market rate for the type of space you’re looking to rent. Compare multiple properties and make notes of the pros and cons of each.
A tenant representative can help you pull information on comparable properties and guide you through the process to make sure you’re not wasting your time. A tenant rep will gather behind-the-scenes details like when the current tenant’s lease ends, how much they’re paying per square foot, and if current or previous tenants received any special deals (like free rent) that could be used in your favor during negotiations.
3. Create a Shortlist
With a good understanding of the market, you can begin to narrow down your ideal locations and properties to a short list of qualified options. If you’re a visual person, create a chart or spreadsheet that lets you see just how they stack up against each other. At the very least, you’ll want to closely compare the pros and cons list you made in the previous step. Think about their location, amenities, and services, as well as the history and reviews of the current landlord.
4. Visit Your Shortlist Properties in Person
The next step is to tour the qualified properties in person to see how they really look, and how it feels walking through. It’s amazing how one property may appear to be in the lead on paper, but feels completely different once you’re in the space. Keep an open mind in case an unexpected property rises to the top of your list.
Since this is a space you’ll be spending quite a lot of time in, it’s worth doing your due diligence and touring each one that you’re seriously considering. To get the most out of these tours, you should have your tenant representative with you. They can offer a second set of (expert) eyes and ask questions or note details you may otherwise overlook.
5. Put Together an RFP
After your site visits, your tenant rep will prepare a Request for Proposal, or RFP, and distribute it to the candidate properties that have “passed the test” so far. Once you receive the responses from landlords, you can analyze the offers side by side. Your tenant rep will help you create a quality comparative lease analysis that allows you to compare apples to apples, as much as possible.
6. Negotiate
Now the “fun” begins! Negotiations can be one of the most stressful steps of the leasing process, but they are a necessary part of formulating a lease both parties are comfortable with signing. It’s highly recommended that you seek counsel to review all legal documents and protect your best interests. This is also where a tenant rep is an invaluable resource, who can guide you through the process and use their expertise to negotiate favorable terms.
7. Customize the Space to Your Needs
After a successful negotiation, you’re ready for one of the final steps – planning your new space and customizing it with construction, if necessary. Your business is unique, so you can’t expect someone else’s former office to fit your exact needs. Construction, whether it’s putting up some cubicles or totally knocking down walls, is a delicate process for a renter. You have to make sure that you have explicit approval from your landlord for everything you do in order to protect yourself and your investment in the new space. Sometimes, a tenant rep can include construction costs as something that’s covered partly or in full by your landlord as a component of your lease negotiations.
8. Move In!
Once your construction is completed, and the space is finished, comes the final step – moving your business over. Plan ahead before packing and moving everything to make the process as quick and efficient as possible. It’s likely in your best interest to hire a moving company to assist, rather than asking your employees to handle the heavy lifting. Let the team pack their personal items and transport those individually, but anything the business owns should be moved by professionals to avoid liability.
You may also need new furniture to make the most of your new space, and don’t forget to update all legal paperwork and client-facing information with your new address! After you’re all moved in, and your information is updated, you’re ready for business!
While this guide certainly isn’t all-encompassing, hopefully has helped you understand the path you’ll be taking as you move into a new space. There is certainly more information that you may want to consider throughout your hunt, but this is a great place to start. Most importantly, don’t hesitate to gather a team of professionals to support you on this journey – including your legal counsel, trusted business advisors, and a tenant representative – to save you time, money, and headaches along the way.
Ready to begin looking for your new space? Contact us today to speak with one of our tenant representatives for guidance on your journey.
This article was originally published on the Omni Realty Group website by Mike Kushner, CCIM. Omni was an exclusive buyer agent/tenant rep commercial real estate firm owned by Mr. Kushner prior to his joining the Capstone Commercial team. It has been adapted and reposted with permission. See the original article here.
