Use these tips to ensure that you’re not taken advantage of when negotiating your first commercial lease.
Signing a commercial lease is likely one of the biggest steps for any business owner. Whether you’re looking for a retail space, or a professional location to run your business, a real estate lease can make or break your entire company.
If you’ve never negotiated a commercial real estate lease, the process can be extremely complicated and overwhelming. Below are a few tips for first time lessees to best handle this incredibly important business transaction.
Learn basic real estate terminology
When determining whether you’re ready for a commercial lease, financial preparedness isn’t the only factor to consider. Even if you’ve found what looks to be the perfect location for your business, it’s important to read the fine print. Business owners should know the differences among classes of commercial property (usually A, B and C) and what is called “usable” and “rentable” space. “Usable” space is the area that you physically occupy for your business, while you may also be charged shared costs for common areas within the building, which can be referred to as “rentable” space.
Additional items that may be incorporated into the lease agreement include real estate taxes, insurance, utilities and maintenance and operating costs of the building. These additional fees can result in significantly more expenses than a business owner may realize.
Don’t try it alone
If you’re a business owner, you likely enjoy doing most things yourself. While this may be ok for some situations, negotiating a commercial lease can be complicated and the last thing you want is to be taken advantage of by someone better versed in commercial real estate. By hiring an experienced commercial real estate broker, you’ll likely avoid some of the easy to make mistakes, and be able to negotiate superior terms for your commercial lease. An experienced broker acts more like a consultant that should help the business owner understand how the real estate component to their business will impact the bottom line for the company’s performance. Specific areas of concern would include location, internal layout and design, operating costs and long term viability of the space as it relates to the growth plan for the business, among others.
Business owners may be so focused on the beauty of a certain office space that they miss out on extremely important nuances within a commercial lease. By working with a neutral third party, you can ensure that you’re properly protected.
Think long term
While you may not be planning to stay in the same office space for the next 30 years, it’s important to think about the long-term effects your retail space or office building will have on your company’s image.
With a commercial lease, you’re investing in your company’s brand and you want it to reflect highly in terms of how you’re trying to present your image to your clients or customers.
Looking for an advocate in your search for office space?
At Morris Southeast Group we’ve been helping small business owners in South Florida find affordable and attractive office space for decades. In fact, we offer our tenant representation services where we walk our clients through the entire commercial leasing process to ensure their needs are met and that we’re able to negotiate the most favorable lease terms possible. To learn more about our tenant representation service, contact our team today at 954-474-1776 x 303 or Principal Ken Morris’ cell phone (954) 240-4400.
