The COVID-19 pandemic had a major impact on the commercial real estate market. Despite this fact, U.S. commercial real estate prices rose at a 1.3% annual rate from April 2020 to 2021.
The rising rent prices for commercial real estate should not deter business owners from finding a commercial building. In fact, now is the time to lease a place for business before prices rise again.
Read on to learn the process of finding a place to lease for business.
Set Commercial Real Estate Parameters
When you decide to lease a place for business instead of buying, the first step is to set property parameters. Because there is a wide range of commercial property available, you’ll want to think of ways to limit your search.
A place that suits your needs might have the following considerations:
- Ideal employee and customer pool
- Commercial property zoning
- Desired size
The last and most important parameter is sticking to a budget. Set a maximum limit that you cannot afford to go over.
Find a Real Estate Broker
When you want to lease a place for business, your best chance at finding a spot is by working with a commercial real estate broker. The two types of brokers are:
- Listing agents
- Tenant brokers
Listing agents are employed by the landlord and will earn a commission that is commonly paid out by the landlord. When you rent a space for business with this type of agent, you might not have to pay an additional fee.
Tenant brokers represent the interest of you, the tenant, instead of the landlord. However, they might have an arrangement with the landlord and must only act as an objective third party.
You can also use a property management company like Liberty Properties to help you find a rental space for a small business.
Understand the Lease Types
Every retail space for lease is not the same. The dominant types of commercial leases are the following:
- Full-service lease
- Net lease
- Modified gross lease
Full-service is the most common for office buildings, but a net lease is cheaper annually. A modified gross lease is a mixture of both the full-service lease and the net lease.
Find the Right Property
Based on your parameters, real estate broker, and the type of lease you are looking for, you should have everything you need to start finding a property. However, these additions are things to take into consideration:
- Amenities and services
- Landlord history
Once you have a few spaces in mind, conduct walkthroughs of each of them.
Negotiate Lease Terms
A business lease agreement might be the trickiest part of securing a commercial building. You’ll want to enter the process by requesting the terms in writing. You can then write a business letter of intent (LOI) with your counteroffer.
The terms should be specific to both parties. You can counter lease terms or accept the terms created by the landlord.
It’s Time to Lease a Place for Business
The steps to lease a place for business are huge for the overall success of your company. The location of your rented commercial real estate can affect your employee and customer retention.
To find the perfect place for your needs, follow the steps in this guide. The future of your business is counting on the perfect place to set up.
For more articles that can help new business owners, check out the other posts on our blog.