Once you’ve located your ideal space (after a lengthy search, tour, and negotiation process), the real work begins. Moving, logistics, and continuity of business are your prime concerns, but there’s more you should consider before signing the lease and securing the keys.

Hopefully, you’ve been transparent about the amount of monthly rent your company can afford, taking into account average utility costs as your business grows and you add to your headcount. That line item for rent may not be what it seems, though. Hidden or obfuscated costs of leasing an office space can cripple a young business’ budget, leaving you on the hook for an extra chunk of change that may not have been clearly communicated to you during the negotiation process.

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If you’ve been in the market for commercial real estate space, you know the difficulties that come with finding and securing the right space for your budget. Outside of a long-term rental commitment with a landlord, your options are limited between subleasing office space or a shared office space.

Most commercial real estate leases involve the tenant renting space from a landlord or property owner, but subleasing extra space complicates the agreement a bit. Tenants become responsible for the subtenants, meaning they pay for their space and you pass along your portion of the rent to the tenant. Prime candidates for subleasing office space include sole proprietors, freelancers, and startups seeking an affordable alternative to full-blown commercial real estate leases.

But there are plenty of aspects of an office sublease that should be taken into account before you take on someone else’s lease – and start saving a significant portion of your rent.

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As with any agreement, there are a number of important factors to consider before entering into a commercial real estate lease. Whereas a residential lease typically lasts 12 months, the commercial real estate world expects anywhere between three and 15 years. While small businesses tend to be more cautious and lean toward the shorter terms (and larger companies investing in longer-term spaces), the answer for your business may not be so clear.

Between size requirements, market conditions, and business outlook, there are many things to consider before making a decision – not to mention the location itself.

Continue reading “Choosing the Right Terms: How Long of a Commercial Real Estate Lease to Sign?”

As a business grows and expands, it’s easy to begin imagining moving into a larger, more permanent space. This is especially attractive for the startup crowd, which romanticizes the “build it in your garage” mentality while striving for the authenticity of a physical, professional office.

But moving too quickly – even in the startup phase – can have serious repercussions on your business that could hinder your growth and agility for years to come. That’s why it’s so important to consider your options and avoid the pitfalls that plague startups who choose to lease a commercial office space too soon or otherwise overextend themselves in the early stages.

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Office moves always start out with excitement. The thrill of a larger space, upgraded amenities, or a better location are exactly why companies expand to a new location. But after your search, endless tours, negotiations over lease agreements, and finally signing the paperwork, the actual work begins.

First thing first, you’ll need a comprehensive relocation plan, which will help guide your organization through the physical move and ensure continuity of business.

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When you’re a small business owner, you look for every possible advantage. There are no shortcuts to success, but with the dawn of shared or coworking spaces in larger cities where commercial real estate comes at a premium, it makes sense to consider your options – until you outgrow them.

Finding traditional office space isn’t a cakewalk and costs of upkeep, overhead, and utilities can shrink a small business’ already tight budget. But coworking spaces have their drawbacks, too. Reduced privacy, limited access to conference and meeting rooms, and the fact that you’re sharing with others outside of your organization may result in a credibility hit.

If you’re trying to choose between a coworking space and a traditional office lease, you’ve come to the right place. Each solution comes with pros and cons that should be closely investigated before moving forward on a new place to set up shop.

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After you’ve done your research, worked with your tenant representation broker, participated in site tours, and figured out your budget, the perfect commercial real estate property is finally in your sights.

Unlike most residential real estate deals, commercial real estate is complex, complicated, and often progresses at a glacial pace. Existing tenants may need time to vacate. Major systems will need maintenance and upgrades. Build-out details will need to be verified and finalized. But until the ink is dry, prospective tenants don’t want to let a suitable property pass them by.

The answer? A signed Letter of Intent (LOI), declaring your formal interest in purchasing or leasing a commercial real estate property.

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Looking for commercial office space is a tedious process. Tenants are rarely equipped to handle the complexity and scope of the commercial real estate world, which is fraught with technical terms, lengthy negotiations, and stacks of paperwork. That’s why tenant brokers exist. With their expertise and knowledge of the local market, they provide an invaluable asset to potential tenants before, during, and throughout the length of a commercial real estate lease. And at no upfront cost to the tenant, there’s little reason not to take advantage of their experience and insights.

But once you begin your search for a reputable tenant broker, you’ll be faced with the prospect of entering an exclusive broker agreement with a commercial broker. As with any formal agreement, you’ll want to carefully weigh your options before making your decision.

Continue reading “Exclusive Broker Agreements: What Are They and Why Do They Matter”