Finding an appropriate location and negotiating a lease for a commercial property can be a pain. You have to find an ideal location, manage your term and rent requirements, ensure you pay a fair price for the space and its amenities, and stop competition from renting in the same location—All while managing your regular responsibilities as a business owner. All of these factors contribute to the headache of negotiating the terms within a lease. However, a commercial property leasing agent can help make the process simple. Take a look at how a Tenant Representative can help find a space and secure favorable lease terms for your business.
Finding a Location
Driving your preferred area of town and calling on ‘for lease’ signs is one way to track down information and find a location. However, this can be a tremendous waste of time as many locations will not be the right size, will have dysfunctional floor plans or even a dysfunctional owner—Not to mention you will be falling into the hands of the landlords leasing agent, who in most cases has a fiduciary duty to negotiate on behalf of the owner. While acting friendly and accommodating, this is a great example of the old axiom “you don’t know what you don’t know.” The agent will present rent terms and facilitate an offer to the landlord but seldom will this person offer up tenant friendly concessions such as tenant improvement allowances, free rent, options to expand, operating expense caps and the like. Having your own Tenant Representative puts an experienced negotiator in your corner. In addition, a Tenant Rep has the tools to prepare a comprehensive survey of available options that fit the parameters you set. An experienced agent can also warn you of locations and landlords that may be dead ends based on zoning, poor parking or management and financial constraints that prohibit the owner from maintaining the building properly or investing in tenants spaces. Working with a good commercial Tenant Representative will save you significant time in finding and securing the right property for your business,
Rent and Length of Lease
Rent and length of the lease are the primary factors in negotiating your lease. However, these two items also happen to be the primary concern of the landlord as well. A good Tenant Representative can advise you on market rents, escalations and also creative ways to structure a rent schedule to match your budget and the landlord’s motivations. Remember, understanding the opposing side’s motivations is half the battle in preparing for negotiations and securing a favorable outcome for your side.
Additionally, the length of the lease can greatly impact the success of your business. You must consider the possibility of problems within the business, which could result in failure. Or on the positive side, you must consider how your lease can accommodate significant growth. As a result, newer businesses may benefit from a lease with a one- to two-year term with the option to renew the lease. Alternatively, inserting tenant friendly options to expand and terminate language in your lease may accomplish the same thing as a short term. Remember however, landlords are looking for the strongest tenants that will sign the longest lease terms. A good Tenant Rep will again balance your need for fiscal frugality and lease flexibility with the landlord’s need for a long term lease with high rent. Let this professional create leverage to turn the negotiations in your favor.
Considering Hidden Charges
Commercial property leasing is all about getting the best price for the square footage. Unfortunately, only focusing on the face rate of the rent can result in being surprised by hidden additional rent charges, often in the name of amenities and operating expenses. An experienced commercial property leasing agent will ensure all future additional rent charges are considered and accounted for up front. For example, many leases allow for a future roof repair or parking lot replacement to be passed on to you in a large lump sum amount at the end of the year. However, by negotiating proper language up front, the cost of this maintenance can be spread over the useful life of the item rather than hitting all at once, or possibly completely eliminated.
Competition and Unsavory Uses
Competitors threaten the livelihood and success of your business. If a competitor were to move into the same commercial property, your business could easily fail. If nothing else, your business will suffer customer losses to your competitor. Your lease needs to include clauses to protect your investment. Some of these clauses include an exclusivity clause, co-tenancy clauses and subleasing options. Your Tenant Representative will ensure all appropriate clauses are included within your lease to keep competitors away.
Also, a professional business can be harmed if a use moves in next door that isn’t compatible with your clientele, image or employee safety. For example, a call center could burden the parking lot to the extent that your employees and clients can’t find a parking spot. Or, a probation office moving in next door could scare away your clients or make your employees anxious. Your Tenant Rep should account for these possibilities in the lease and give you an out or a remedy should the landlord violate these restrictions.
These are only a few examples of how a leasing agent can be effective in helping you get the best lease for your business in the Treasure Valley.
As you prepare to find and start negotiating a lease for a commercial property, we highly encourage you to research Tenant Representatives in the area and to start learning more about the process (check out this article about leasing terminology or download this free 12 month moving checklist).
To schedule a no-obligation consultation with one of our agents, contact us today!