Conduct Multiple Walkthroughs
You and your broker should identify multiple commercial spaces to view. This helps you get a better understanding of average price and gives you a leg up during the negotiation process. During your search you’ll also want to compare rents to each other to ensure you’re staying on budget.
A rule of thumb is that you should consider between 4 – 10 commercial properties prior to signing a lease. Alex Cohen, a broker and principal of Future Workplace, tells Fit Small Business that:
“If it’s a retail space then location is critical. Proximity to other retailers, access to transportation, and visibility/signage opportunity can be critical. In this case, there may only be 4 or 5 spaces available that meet the business’s criteria and objectives. A good broker will sometimes develop creative alternatives that might be outside the locational parameters but offer other advantages – such as co-tenancy or lease term flexibility.
In terms of office space, typically tenants may consider 8 -10 alternatives. Tenants will then narrow the options down to 4 – 5 and go on physical tours. Tours are typically conducted in a single day, but if you tour more than 4 – 5 during one day, the spaces can all seem to meld together, challenging the decision-making process.”
These walk-throughs are called “technical property reviews.” They’re conducted with your broker and the landlord’s broker. Once you’ve walked the properties, you’ll want to consider the different lease terms of each.
You’ll also sometimes want to walk a property with a licensed contractor. This is because some commercial spaces require lease build outs, which are necessary additions or improvements to the space. Build outs can be fully or partially covered by the landlord. It’s important in this scenario that you get an accurate renovation estimate and negotiate a build out into your lease.
The deciding factor between your options will often be the lease terms. Let’s take a moment to discuss the different types of commercial lease terms as well as the common commercial lease terms.