Whether you’re just getting your business started or expanding from your existing space, leasing a commercial property can be one of your biggest investments. Understanding the steps to leasing a commercial property is essential for ensuring a successful transaction and securing the best deal for your business.
1. Understand Your Business Needs
Taking time to think through your needs for your new office space may save you money and anxiety. You may want to ask yourself the following questions:
- How many people will be using the office space?
- Is it important to have street level frontage?
- Which neighbourhood will place you close to your target customers and clients? Is this something you need to consider?
- Will natural light be available throughout the commercial property and is it important?
- Is your business going to grow quickly?
- How much confidential work does your business do and will you require private office spaces?
- Would a short-term commercial lease work for now or is a bigger office space you can grow into a better deal?
Try to stick to your business needs when choosing your commercial space. Also consider if there are ways to make your business efforts more efficient to save space.
2. Build Your Team
Assembling your team is an essential step in leasing a commercial property, as it combines the expertise and perspectives necessary to navigate complex leasing decisions. By combining the strategic market insights of real estate experts, along with financial and operations leaders, you build a cohesive team to successfully navigate the leasing process. Your team of internal and external experts should include:
External Team
Commercial Real Estate Broker
Unless you’re a real estate broker, you aren’t an expert at finding and negotiating commercial spaces. Tapping into experts – commercial real estate brokers – is a smart business move.
Once you share your leasing priorities, your commercial real estate broker can guide you through all the steps to leasing a commercial property. They’ve had experience, and will consider, important elements like budget, space requirements, possible locations, features and amenities. They can assist with your layout and what possibilities a space may offer.
Commercial real estate brokers are also valuable for keeping your expectations realistic. Listen to them. They’re knowledgeable about the market and what’s possible for you. Additionally, commercial real estate brokers have established relationships with local landlords, which can be beneficial for gaining access to high-demand spaces.
Real Estate Lawyer
Another expert you need on your team is a real estate lawyer. Your lawyer will make sure you and your business are protected. They’ll walk you through all the steps of financing your move, review your lease contract, help you negotiate your contract and give advice.
Internal Team
Financial Decision Maker
An essential member of your team is your organization’s financial decision-maker. This individual has the authority to approve or reject lease agreements after carefully evaluating how each lease aligns with the organization’s financial health. They ensure that leasing options are consistent with the organization’s financial capabilities and strategic objectives, which helps prevent budget overruns or commitments to spaces that could harm cash flow.
Operations Manager
Sometimes, the financial decision maker can be disconnected from the daily operations of the business and the needs of the team. As a result, you should involve an internal operations manager in the commercial leasing process. Your internal operations expert can evaluate the specific needs of the workforce, including layout, amenities, and proximity to clients or suppliers, to ensure that the selected property enhances efficiency and productivity. Their participation is essential for minimizing the risk of disruptions, inefficiencies, or employee dissatisfaction after the move. The Operations Manager can also loop in your marketing team to ensure that your space reflects your business’ brand.
3. Set a Budget
Working with a commercial real estate broker to set a budget is crucial. They can help you analyze your financial situation, factoring in not just rent but also utilities, maintenance, and other potential expenses. A well-defined budget will help narrow your options and avoid overspending on a property that doesn’t meet your needs.
4. Research Commercial Properties
Conduct thorough research on available commercial properties that meet your criteria. Use online listings, local real estate websites, and your broker’s resources. Visit potential spaces to get a feel for the layout, location, and surrounding area. This hands-on approach will help you identify the best fit for your business.
5. Contact Commercial Property Owners
Performing your own due diligence is essential. Contact the property manager to review the property’s history, zoning regulations, and any restrictions that may affect your business. Understanding these factors upfront can save you from potential headaches later.
6. Don’t Forget to Negotiate
Your commercial real estate broker is also an experienced negotiator. Don’t sign the first lease offer that comes your way. Your lease is usually open to negotiation.
Review all your costs – property tax, insurance, utilities and maintenance. Who’s paying for office leasehold improvements?
Always ask about tenant inducements, those special deals that save you money. They may include a couple months rent-free or help with the cost of commercial leasehold improvements.
7. Consider Leasehold Improvements
Who owns any improvements you add once you’re in your new commercial office space? If you build an extra bathroom or add more lighting, who does it actually belong to?
Clarify in your lease who owns the improvements when you move out of the building. Unless otherwise specified in the commercial lease agreement, anything attached to the building usually becomes the property of the landlord. That means your investment in new rooms and features stays there; you can’t take it with you.
8. Secure Financing
It’s essential to secure financing to make sure your move runs smoothly. Work with your financial institution to understand your options and get pre-approved for any necessary loans. Your broker and lawyer can provide valuable insights on the financial aspects of leasing a commercial property, helping you find the best financing solution.
9. Expect Downtime
There’s an expression: Nothing comes easy. Moving your business into a new commercial space isn’t easy. It’s time-consuming and likely will require some downtime for your business.
Work with your employees to find the right time to make the transition. When you start scheduling the move, consider not just the time to move in but also the time to do the leasehold improvements. Often the commercial leasehold improvements take longer than expected so it’s wise to have some flexibility in your scheduling.
Don’t forget to alert your customers and suppliers that your move is happening. Schedule changes to your digital presence as well. You want your online presence to be up-to-date so new and existing customers can find you.
Find Your Ideal Commercial Space with Summit Properties
Finding the right business rental space involves leveraging various resources. By following these steps and taking the time to research and negotiate effectively, you can successfully lease a commercial property that meets your business needs and sets the stage for future growth. Summit Properties’ portfolio includes more than 700,000 square feet of premium commercial office space in some of London’s prime business districts. Contact us to begin your search for a commercial space!