The process of locating usable space with a knowledgeable real estate agent is the real start. Have you determined the location that is best for you? Your search will help prepare you and temper expectations greatly. Even if you are contemplating renegotiating a lease at an existing location, or moving to a different space with the same landlord, it is a good idea to comparison shop just to familiarize yourself with what the market trends and prices are.

Know what you want and what you must have.  You must know the maximum and minimum amount of square footage that fits your needs, as well as the floor requirements. Does the nature of your business make the groundfloor a necessity? Is a panoramic view from the conference room important to you? Do you want a build-out of the office from the concrete, meaning totally new floor, carpet, walls, etc.? Is there a security system in existence at the office space? Do you require one? Is the heating and air conditioning individually maintained? If not, how will you be charged for it?

The more that you require, the less negotiating room you will have. On the other hand, make sure you, or the realtor, find out important information like the occupancy ratio over the last year. Is there square footage available where a lease has fallen through? There are instances in which large corporations rent entire floors, then do not need as much or decide to rent elsewhere. In these cases, the management company of the building will sublet the space – often for less than the going rate for office space in that building. All of these things could be negotiating points in getting the best rent.

Determining the length of the lease.  One year leases are few and far between, with the most typical being three (3) years. It is important that you take your growth potential into consideration. It will not be smart to sign a 1,200 square foot, five (5) year lease when you anticipate tremendous growth and will need 2,500 square feet in three years. It might not be a bad idea to put a clause in your lease that addresses this if much growth is anticipated. This can be done in a variety of ways, which your realtor can address for you.

Have a monetary range in mind.  During the negotiations, you will need to have the amount of rent that you can afford every month. Your search and your realtor should be able to provide you with the current market rental costs for the area in which you want to relocate, or even for renegotiating at your present location. The national average for rent has been noted to be between four (4) and five (5) percent of your total operating costs.

Determine all costs of the lease.  It is essential that you determine the other costs associated with the lease of the space. For instance, what portion of the heating and air conditioning are you responsible for; and what is the average monthly cost. Get types and figures on associated costs, from the landlord and the Realtor – it will not hurt to have them from two sources. As you plan your finances, you do not want any unexpected expense surprises.

One cost that is often overlooked is the common area factor. The common area is all parts in the building that are used by or for all tenants of the building. Usually included are: building lobby, all corridors, janitorial and electrical closets, elevator rooms and rest rooms. The owner determines what percentage of the building these areas represent and adds that percentage to the amount of space, you, the tenant occupies. So, while your rent per leaseable square foot may be $18.00, if there is a 15% common area factor, you actual cost per square foot is going to be $20.70.

Although the previous tasks may seem arduous, the real task is getting final lease approval – that is all parties agreeing on the finer points. You should write down all the things you would like to see in the lease and any specific time frames. You do yourself an immense favor by having a clear cut idea of what you want, which things are negotiable and which things are not.

Be ready to compromise, as it is highly unlikely that the lessor will tailor the lease to your exact specification. It is important that you have a clear idea of those items which you can easily give up, as flexibility is essential to successful lease negotiations. Equally important is not being desperate, or you can end up with a lease on a property which does not fit your needs at all and it will give the lessor all the bargaining power. It is an excellent idea to have your strongest negotiator handle this area, or brush up on your negotiation skills before going in.

At the very least, being knowledgeable about the current market trends for your area, the particulars of the real estate you are looking at and what you want is crucial to obtain a successful lease.

There are many options and terms available when leasing office space. You should always be ready to walk away if the terms are not acceptable to you. In order to make sure you have this option, you must start your search early enough and be thorough. You should have a couple of properties which might work for you, ranked in order of most desirable. successful negotiations are easiest when you have prepared yourself and really know what your needs are.

Take that number and divide it by 50 working weeks in a year, next divide that number by 40 hours per work week. This figure is what you are worth per working hour.

Time- $_______ (your yearly salary here) / 50 working weeks/ 40 working hours per week = $ _______ THE VALUE OF YOUR TIME

Don’t you think that your time is better spent running your business and not doing something that can easily be out-sourced ???

Don’t forget that in most cases real estate brokers who represent tenants are paid out of commission splits with the property owners leasing agents, that means it costs you nothing! That is the portion of commission you let the listing broker keep if you do your own transaction without professional representation.

On the tenant-buy side of the commercial property equation, it makes sense to find someone, who can help you with respect to making these important business decisions.  My advise is to find someone!

Q How can a broker save me money if I am going to simply renew my lease?
A. The broker should provide the comparable market conditions which result from a complete market study, this will give you the ammunition you need to make sure that your renewal lease is not abusive on the rate. Knowing what other concessions are being offered in the market place helps you get all that you are entitled in the renewal.

Q. What other areas of cost savings exist, other than the lease rate per square foot?
A. Tenant improvement allowances, escalation methods and abatements are key areas available for dollar savings.
Large companies with multiple leases can benefit from real estate consulting services like Workplace Consulting, Information Management, and Program Management. These services can be use to trend occupancy costs downward substantially. Your broker should be able to help you negotiate these items during the relocation or renewal process.

Q. Should I lease or buy?
A. The answer to this question should be answered only after careful consideration of your firms long term goals. In areas where real estate is appreciating (like Charlotte, NC) purchasing can be a very profitable approach. Consultation from a real estate broker, financial planners (CPA’s) and bankers can shed light on all of the key areas to consider before making this decision. The level of active involvement you desire with the investment should be carefully considered.

Q. What if I am short on the down payment needed to make a purchase?
A. There are several great loan programs available today. These programs coupled with SBA loans, can get small business operators into properties from 0-10% down! Many developers and investors will partner with businesses who are able to commit to lease-purchase option or land trust conveyance. Clearly, the nature of your real estate needs will dictate exactly how the deal could be structured. See your broker for details.