Regardless of what kind of space you’re looking for, if you want to rent an office space for the first time there are a few things to keep in mind, starting with the fact that the landlord is renting out the space for the purpose of making money. This means that you as a potential tenant need to both convince them that you’re a reliable business to lease to and also look after your own interests during negotiations. Be ready to answer the landlord’s tough questions and prepare yourself for the whole process by considering a the following factors, as suggested in the article “Steps to Secure Your First Commercial Space”:
#1 A Business Plan
Having a solid business plan to show a landlord is especially important for new companies who can’t provide a history of financial statements to show their credit worthiness. Think of showing a business plan to landlord as similar to pitching your company to investors. A landlord is also taking a risk and making an investment in the success of your business, so it is important to give them a clear, realistic, but hopefully positive outline of where your business is headed. If your company is simply relocating, try to supply the landlord with information about your rental history and previous budget plans to show that you are a financially stable tenant.
#2 An Agent
While it is possible to rent a space without an agent, an agent can be extremely helpful, particularly for new businesses who don’t have a lot of experience with the commercial real estate market. It is important to select an agent who will work with you throughout the entire process and who is representing only your interest and not acting as an agent for both you and the landlord. Remember that the listing agent named on the property’s advertisement was hired to work for the best interests of the landlord. One advantage of working with an agent is that they know the markets and can give you an idea of fair rental rate in that area. They can also help you during negotiations, which could save your company a significant amount of money in the long run, and they are also familiar with the language of leases, so they understand what will benefit or potentially hurt your company. If the landlord pays for your agent, as is almost always the case, there is very little downside to working with an agent.
#3 An Exit Strategy
Although it’s not the most pleasant thing to think about, just as you have an exit strategy for your business you should also have an exit strategy for your lease that is factored into your lease negotiations. If you’re working with a good agent, they should be able to help you negotiate for certain provisions that will make it easier to get out of the lease if absolutely necessary. Some of these provisions include a sublease or assignment clause, or an early termination clause. This aspect of renting a space can be difficult to navigate and absolutely must be taken care of before signing the lease, so strongly consider consulting with an agent as you form your exit plan.
A favorable lease is so important, particularly for small businesses just starting out in their first rental space. If you don’t have a lot of experience with the commercial real estate market, it is important to prepare yourself for negotiations by having a business plan and exit strategy ready, preferably with help from an agent.