The Corona Virus won’t be with us forever, and when the economy begins to get on its feet, and your business resumes plans to grow and expand, it’s time for you to move to a bigger and better place or possibly look at alternate types of space to house your business. This will require you to sign a commercial lease for your new office. The excitement of a new place may overtake your sense of assessment and lead you to make a hasty decision.
Leasing an office property is a major decision based on in-depth research, careful consideration, and expert advice. With hidden costs, obstinate landlords, and regular maintenance expenses, inexperienced entrepreneurs are bound to make slipups.
It is one of the most daunting tasks a business owner faces requiring significant financial and time commitment. When signing a commercial lease, you should be well-aware of key terms to avoid major pitfalls. Due to the complexity of the task, it is advisable that tenants retain a trusted and experienced tenant representative to avoid making any mistakes, such as Steven Goldstein, who has been assisting his clients in Chicago metropolitan area since 1991.
Here, we have rounded up expert advice from the members of the real estate council to protect you from making similar mistakes on your first commercial lease.
Lack of planning
Most tenants or business entrepreneurs are unaware of their office space needs. Work with an architect for your program to measure the kind of set up you need for your organization. If you’re unwilling to take up the added expense, use the basic rule of thumb: measure the space needs with your headcount plan. Most tenant rep firms will have architects that will do this initial assessment and space planning at no charge to their clients.
Typically, business owners are quite optimistic when leasing office property for the first time. They assume getting a big place, and putting up the signboard will bring them business. But that’s not the case.
The decision for leasing office property shouldn’t be based on the cost and size of the place, but you should also consider various other critical factors such as location, amenities, the versatility of the space, and its infrastructure.
Set a Budget
Quite commonly, entrepreneurs select a property without setting up their budget. Cost should be one of the foremost factors for startups when leasing for the first time. Getting a high rental deal will be burdensome as businesses don’t see profits in the first few years. Thus, it’s imperative to set your priorities.
To ensure you’re getting the best deal, benchmark similar properties, and compare their pricing before entering into an agreement. You can even negotiate on one of your most favorite locations to get it on a rate and terms that serve your interest.
Inspect the Lease Agreement
As a tenant, you should be diligent about the lease terms and conditions to ensure it works well for you. As the adage goes, the devil is in the details, and you should thoroughly read the contract as, in most cases, the terms favor the landlord.
But for that, you should be familiar with real estate verbiage to avoid future conflict with the landlord. You should look up at the lease terms, rent obligations, maintenance requirements, and other subletting obligations. For instance, a 30-day notice period is deplorable, as relocating to a new place is a time-consuming process.
Typically, the 70-pages long document is designed to make money for the landlord; therefore, you should get it legally inspected. Make sure the property you’re renting is zoned for commercial use and conforms to various legal codes, rules, and regulations. Get the HVAC unit checked from a professional to avoid heavy maintenance costs.
Solicit Professional Assistance
Tenant and landlord both would want to devise a lease that works in their favor. However, the gullibility of the tenant puts him in a disadvantageous position. To levy up the game, he typically requires professional help from a lawyer, accountant, and broker.
An attorney or real estate lawyer will help you evict unfavorable lease terms and phrases that could cause financial loss. Similarly, you will require a tenant representative for lease negotiations. An experienced agent will help you avoid any major mistakes that you would otherwise have made, unknowingly.
Moreover, an accountant will keep in check your financial expenses to ensure that the selected property is well within your budget. Avoiding costly mistakes ensure leasing is well-aligned with your business goals.
Steven Goldstein and ChicagoBroker.com have been active in Chicago as an office tenant representative since 1991. Please let us know if we can be of service with any of your commercial real estate needs. We are available 24/7 to answer any questions or assist with any real estate needs.