Renting commercial space is very different from renting a home. The location and accessibility can often differ between regular clientele and happy customers or poor sales and high staff turnover. The specific attributes you need in space are often the same whether you are a first-time commercial property renter or an experienced business owner looking to expand.
Once you have narrowed it down to a few choice locations, make sure to send the lease to be evaluated by a legal professional. Commercial leases tend to be for more extended periods, and you do not want to get into a legally binding document without ensuring that it can aid you in the event of surprises.
Another factor to consider before signing the lease is multiple inspections. A commercial property needs numerous in-depth evaluations by different inspectors. Ensuring the plumbing is sufficient, that the electrical installations are EICR certified, and the foundations are solid is necessary for the safety and smooth functioning of your business. As you can see, vigilance and details are required for finding the right deal and commercial property for your needs.
Let Your Lawyer Negotiate
A good business or commercial property lawyer can help you to get the perfect property at a reasonable price. If you do not have any experience with leases and commercial renting, then a lawyer or even a good property agent would get a better deal for you. They will also have the expertise to understand the fine print and any legalities in the lease agreements that would not stand out to you.
Set an Exact Budget
This is a property that is intended to help your business generate more profits. Therefore, the cost of renting and maintaining it must not eat into your profits. Setting a budget with clearly listed needs, wants, and ‘would be nice’ requirements is essential to ensuring that you rent precisely the property you need. Going with your gut could end up costing you more money than you will earn by expanding to a larger space. You do not want to risk being unable to sustain the property before your lease period is up. These leases can be very hard to get out of, and you could lose your business in trying to keep up with lease payments. It may sound drastic, but having reasonable expectations and a non-negotiable budget could help you avoid overspending and bankruptcy.
Keep Your Options Open
Renting a commercial property is not like looking for a dream home. You do not have to find the perfect location and commit to it to show your sincerity. Commercial property agents expect you to be negotiating with several places at once. They will use their knowledge of the market and their competitors to offer you better deals to entice you to sign with them.
Having more than one property on your radar will allow you to walk away from an overpriced location without stress and worry. Staying calm is a significant factor in pulling negotiations in a direction that will benefit you.
Ask for Less
People who want to rent your property will always ask for the maximum amount they think you can afford to pay. You must ask for less than they would be willing to take and then negotiate towards an amount you are pleased with.
This is where your set budget will come in handy as you will immediately know from the asking price whether you can negotiate down to your preferred range. Generally, you can request 10 to 20% lower than the asking price and then negotiate. But if the asking price after 20% off is still far out of your budget range, then you know the effort of negotiation will be wasted for that property and can move on to better prospects.
A good tip for making sure that you’re being offered a fair price is to measure the square footage yourself. As usable square footage is how commercial rent is supposed to be determined, you can judge for yourself if the rent is being inflated or if the property owner is trustworthy.
If the asking price is appealing, consider negotiating a longer lease term to better base rent. Some owners will be willing to offer free rent incentives to get a longer lease agreement. It benefits them as they will have a reliable source of income, and it helps you as free rent periods count towards discounts for you.
Other essential factors to consider before committing to a property are whether they will allow you to negotiate for lower early termination fees. Most leases will have penalty clauses in place for situations where you may need to vacate the premises for whatever reason. Renting for a longer period may incentivize the property owner to give much lower penalty fees. This may benefit you in the long term as you never know whether you will have to downgrade or upgrade within a few years.
Insist on a sublease clause if they will not lower the penalty fees enough. This way, you will have a way to keep making the payments and avoid the penalty fees till the lease period is finished. Planning for the worst will allow you to enjoy an easier time while managing the rental property.