If you are sure you need an office space or commercial real estate for lease, the next step is to find out how you will go about this process. Whether you are setting up a new office or upgrading to a bigger space, renting a spot comes with its own set of risks.

It’s a good idea to plan ahead so you can avoid pitfalls and errors. Get a suitable lawyer on board and take your bank manager into confidence. This will help you work around tight cash flow and avoid hidden costs. Today, we shall look at the steps you must follow to lease commercial real estate successfully. 

What Is a Commercial Real Estate Lease?

A commercial real estate lease is a contract signed by a landlord and tenant. The contract grants the tenant the required rights to use a property commercially. The tenant is supposed to pay a sum to the landlord for occupying the area.

A commercial and residential lease has a similar concept, except the property is for different purposes. This means that a commercial contract is more detailed and business-oriented, and it is quite likely that both parties have sufficient knowledge of commercial dealings.

Commercial properties are evaluated and priced using special criteria, whereas a residential property is rated based on space, location, etc. Commercial leases last for five years on average, whereas residential leases last for a year.

Steps to Leasing Commercial Real Estate

1. Thoroughly Assess Your Business

Before you delve into the leasing process, the first thing you must do is assess the needs of your business. Figure out the real estate needs and space you will require over the next few years. If your business is flourishing and growing steadily, it may be a good idea to opt for a short-term lease. Alternatively, you can also look for commercial space that provides room for expansion.

While having the appropriate space for your office or commercial setup is essential, it may also be a smart idea to search for ways to increase the efficient use of a given area. By reducing square footage needs, you can save money for other office needs. Other things you must do include:

• Assess your current financial standing
• Pick a budget for your lease
• Select the appropriate time for leasing

2. Take Advice

If you already have a successful business running and you are hoping to switch locations, then it is a smart move to take your team into confidence. Discuss your stance with business partners and real estate advisors for the best outlook. Talk to your banker or banking manager to see where you stand financially and what budget should be allotted to leasing.

You may also want to hire a lawyer and even work with a real estate broker to pick the most suitable spot. Other people that might be worth consulting for advice include suppliers and business associates.

3. NavigateYour Options 

Always be flexible when looking for office space in the beginning. Work around different types, spaces, and locations to get a realistic understanding of how much rent you will have to pay. An agent or broker will charge a commission, but it can be a great way to land the fairest deal due to their immense market knowledge.

• Expand your search and explore the market thoroughly before narrowing down your options.
• Remote locations offer better rent but make sure your employees are willing to commute to the location daily.
• Rent a space larger than you require and sublease a part of it to pay rent. This way, you can expand when required.

4. Negotiate Your Pick

Do not sign a lease immediately once you have made a pick. A lease can be negotiated, and it may be helpful to thoroughly understand the costs and requirements of the lease before you sign it. Go over utilities, tax, maintenance costs, and other charges. You can also request inducements like a few rent-free months or cost coverage of leasehold improvements. Leasehold improvements such as the following should also be discussed in detail  before signing a contract:

• Are you allowed to build extra rooms, bathrooms, or a kitchen?
• Is machine installation allowed?
• Who will be in charge of improvements if the business moves out?
• Will all property (newly installed and old) become the landlord’s property when the lease ends?

5. Finalize

The last step is finalizing the deal and signing the contract. Consult your banker so you do not end up using working capital to pay rent. Talk to your employees regarding a suitable timetable for transitioning to the new space. Ensure you can alot sufficient time for improvements and that the transition period is flexible. In addition, get a contractor on board so that renovations can be fast and budget-friendly.

Endnote

Leasing a commercial space can be challenging. However, the right knowledge, advice, and careful following of leasing steps in proper order can make it simple.

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