Signing a commercial real estate lease is an important business decision. Many tenants rush the process in an attempt to get things done quickly. In the process, they overlook important issues that lead to costly leasing mistakes. Here 8 leasing mistakes you don’t want to make:
1. Lack Of Tenant Representation
A tenant rep broker understands the market and has the experience as well as the expertise to get you a competitive deal. Leasing negotiations that do not involve a tenant rep broker often draw for long and tenants who are largely inexperienced get unfavorable deals. There is no downside to being represented by a tenant rep broker. Instead, you will save both time and money.
2. Not Starting Early
Many companies underestimate how long it takes to conduct an office lease negotiation. A typical office lease negotiation requires that all parties (both the landlord and the tenant) to agree on issues relating to the cost, legal documentation as well as timing. When this process is rushed, it usually results in unfavorable deals.
3. Renting an Office Without Inspection
In an age of online listing, it is common to see many commercial real estate tenants renting office space online. Internet pictures and space descriptions are not sufficient to justify the true nature of an office. Hence, it is important to have a physical inspection of the property before leading.
4. Not Calculating Office Needs
When you go into office search and leasing negotiation without calculating your office needs, the process becomes a wild search. Calculating office needs require that you know the type of office layouts, works, and employees that will be using each section of the office space.
5. Underestimating Tenant Leverage
The office lease isn’t a one-sided thing. When you have a tenant rep broker with you, you can ensure that your financial and operational needs as a tenant are incorporated in the lease document.
6. Not Preparing For Expansion Needs
A big leasing mistake is to outgrow your office space. This leads to a frantic search for a new office space or enlarging the existing one. The direct implication of this is that it can impede your business growth as attention is diverted to expansion instead of business operations. In a difficult scenario, you may be early into your lease agreement. Hence, you must consider your business growth when leasing an office space.
7. Moving Too Slowly
Many commercial real estate tenants miss out on great opportunities because they dawdle. If you discover a great space, it is important to move swiftly.
It is also important to not get panicked into moving too quickly. Many landlords play tricks where they show other tenants that are about to sign an LOI. To avoid these gimmicks, it is advisable to work with a tenant rep.
8. Putting Costs Above All Else
You must consider other factors aside from the cost. A lower rent can be an unfavorable lease if there is less control over the quality and timing of the build-out. Commercial leases are unique, and the base rent should not be the only factor to consider when leasing an office space. It is essential to watch out for all the clauses included in the lease.
Here are a few older articles we know you'll like:
10 Commercial Office Site Selection Tips
What to Avoid in Commercial Real Estate
Top Deal Breakers for Tenants in Commercial Real Estate
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