The Step-by-Step Guide to Leasing Commercial Real Estate
Finding and leasing commercial real estate is often new for most business owners.
After all - there aren’t many times in a business’ life-cycle that you need to find a new space, negotiate a commercial lease, and renovate it.
Here’s a step-by-step guide to leasing commercial real estate for business owners.
Step 1: Run Your Numbers
Before you even start your search to lease commercial property, review your financials with your CPA and business advisors.
Does it make sense for you to lease space?
Make to put a budget together to ensure that your business can support the additional expenses that will be incurred when you open a new location.
Step 2: Determine Your Needs
Sit down and thoroughly think through what your business actually needs and what you’d like it to have.
Here are a few questions you should ask yourself:
Do you plan on hiring soon? If so, you should lease more space.
Will you have to build out the space? If so, you may want a longer lease.
Can clients easily find you? If that’s important, you need visibility and access.
There are far more points that you’ll need to consider before starting the search, but that’s what your team of professionals will help you cover.
Step 3: Assemble Your A-Team
Leasing commercial real estate is new for most business owners.
And the learning curve is rough.
Fortunately, you’ll be able to assemble a team of highly-skilled professionals that can help you find your location, negotiate your lease, build out your space, and so much more.
At a bare minimum, we recommend having:
A Commercial Real Estate Broker
A Commercial Real Estate Attorney
A Commercial Contractor
Step 4: Focus on Your Business
Don’t neglect the entire reason that you’re expanding!
Many business owners can get sidetracked by their search for commercial space and forget to focus on the day-to-day of their business operations.
Be sure to hire the right team to help you on your journey so that the search doesn’t become a distraction.
Step 5: Weigh Your Options
At this point, your tenant rep broker will present you with different options for lease.
List the pros and cons of each location for you and the culture you’re looking to build with your company.
Yes, you need to keep price and functionality in mind, but also:
Location
Visibility and Access (for clients and employees!)
Ability to Scale
But don’t over do it on this step - it’s important to look at any space you think could possibly be a fit.
You never know where you’ll find your next home.
Step 6: Tour Potential Sites
Finally - time to get out there and actually tour some spaces!
When looking at prospective spots for lease, try and schedule everything on the same day or at least within the same week.
After you’ve toured a number of different locations, they will start blending together and you may forget which space was which.
Pro Tip: If you like the space, keep your emotions to yourself. Do not let the other side know that you like their availability or you may lose negotiation footing.
Step 7: Negotiate the Lease
Everything is negotiable in commercial real estate.
Well, at least to a certain extent.
While landlords may have restrictions from the landlord regarding insurance requirements, estoppels, and more, just about everything else can be negotiated.
Your attorney and commercial broker will help you negotiate:
Rental Rates
Rent Abatement (time where your business gets free rent)
And more!
Step 8: Open for Business!
You’ve made it - time to open for business!
Be sure that you understand your lease and review it regularly - it is a legally binding document by which you and your landlord will be governed during your term.
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About The Author:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors as a board member for the Real Estate Investors of Nashville. Learn more at www.TylerCauble.com
If you have ever started a search for commercial real estate, you likely know that it is almost guaranteed your new space will require some form of build-out. Although looming construction costs can be intimidating, tenants have the option to push for a tenant improvement allowance in order to help mitigate the costs associated with a build-out.