Making a mistake on a commercial real estate lease can be a major financial setback for your business. Here are a few common mistakes tenants make and some tips for avoiding these mistakes, as suggested in the article, “The Eight Mistakes Tenants Make When Leasing Office Space“:
Mistake #1: Entering negotiations unprepared. Often tenants do not know exactly how much space their business will need when they enter negotiations, and could wind up with only 12,000 SF when they actually needed 15,000 SF.
Solution: Have an architect do a space program to determine exactly what size office space you need. Many architects will do this for free as a favor to a good broker. Working with a broker might also help you avoid this problem, because they will raise questions that you might not have considered, such as what floor load capacity you need or if you have any unique telecom needs.
Mistake #2: Not thoroughly inspecting documents. It is important to brace yourself for a lot of paperwork when you begin the process of negotiating a lease. An extremely common tenant mistake is not carefully reviewing all of the documents they sign. Landlords are trying to make a profit on the lease, and while their terms may be legal, they might not necessarily be fair or designed to help your business. It is also important to double check to make sure that the property is zoned for what you need and that your landlord is conforming to safety codes.
Solution: The obvious way to avoid these issues is to carefully go over your entire lease and any other documents, possibly with legal help to ensure that you avoid pitfalls you might not be aware of. One small thing you can do to avoid a potential major expense is hiring someone to inspect the HVAC (heat and air conditioning) unit in your office space before signing a lease. Often landlords will claim it is working without actually having it checked. If the unit is not working and you take possession of the space without knowing, it could cost you quite a bit of money down the line to repair.
Mistake #3: Overpaying on rent. Often tenants rush into agreeing to a rental rate without investigating what tenants at similar properties pay, and they end up paying way more than the going rate. Be familiar with the commercial real estate market in an area before beginning to negotiate your lease.
Solution: This kind of knowledge is very basic to commercial real estate brokers, so consider hiring them if you want to minimize the potential for mistakes. They can help you figure out what an appropriate rental rate is, as well as what kind of security deposit you should expect to pay—and they will save you some time by doing all of this research for you.
Do not allow yourself to be put in a position of financial stress because of leasing mistakes. Begin the process prepared and seek help when needed to get the best possible lease for your business!
If you have questions about how to calculate square footage for your business’s needs, give a DDI Commercial real estate broker in Overland Park a call at 913-685-4100!