When faced with an expiring lease or the need to expand, many can be overwhelmed by the task. Here we will identify the steps in the process and the pitfalls to watch out for.
1. Locating the Right Space
There are a number of commercial real estate websites that can help you search by criteria filters like square footage, area and budget. It is important to remember when utilizing these online tools that the general public only has access to about 25% of the market via sites like these (LoopNet, CityFeet, etc.). In order to really make sure they have exposure to the entire market of available spaces, many businesses seek out the services of a commercial tenant representative. Commercial tenant reps are commercial real estate professionals who specialize in representing the tenant’s interest when identifying property and negotiating with a landlord. These professionals subscribe to costly database services and have close relationships with other commercial brokers to make sure they have access to 100% of the office inventory that is on the market.
2. Setting Up Tours
More often than not, it may take several attempts to secure a tour of potential offices space. Commercial brokers cover a lot of ground and sometimes prioritize prospects who have a tenant representative because they view them as more credible and potentially more serious about securing a new lease. If you cannot secure the tours you would like, consider the services of a tenant rep or don’t be afraid to call several times!
3. Submitting Your Letter of Intent and Negotiating Your Lease
Anthony H. Merritt
There are a number of things to be decided upon and negotiated during this phase of the leasing process. First, you will want a letter of intent that carefully spells out all the terms you are requesting as a part of your new lease, such as price, lease length and any renewal options. If you are negotiating a standard 36- or 60-month office lease, it is not out of the ordinary to ask for one or two months of abated (“free”) rent to start the lease term. This abatement period helps to cover the cost of moving and any alterations you may be making to the space on your own dime. When submitting your letter of intent, the landlord’s response will largely be based on the strength of your financial statements. You will be asked by most landlords to submit financial statements to show your company’s creditworthiness when you submit your letter of intent.
Once you have navigated these steps, you are closer to signing your lease. This overview only scratches the surface of the process when it comes to identifying and securing your new office space, but don’t let the many moving parts deter you. If you encounter challenges, enlist the help of a commercial tenant representative.
LSI Commercial Real Estate is a full-service commercial real estate brokerage in San Antonio. Anthony H. Merritt, VP, specializes in office transactions as a tenant representative. TREC #655156. Contact Merritt at 830-481-7919/210-341-4424, or firstname.lastname@example.org.