Most companies begin searching for new commercial real estate about nine months before their lease ends. However, this timeframe is often too short. Savvy tenants spend two to three years planning a move. Here are the essential steps to help you find and negotiate the ideal space for your business:
Step 1: Evaluate Your Current Space
The first step in finding a new space is to assess your existing one. Sometimes, minor changes can fix any issues. If your current space works well and the rent is reasonable, staying might be more cost-effective. Staying put also avoids the disruptions caused by moving.
Step 2: Hire a Commercial Real Estate Broker
If you decide to explore new options, your next step is finding a professional tenant representative. A broker can save you time by guiding you through every step and providing better results due to their expertise. Consider reconnecting with the broker who helped you find your current space. However, it’s wise to also speak with other active brokers in your area. Talk to similar businesses to see which brokers they recommend.
Step 3: Research Markets and Submarkets
The site selection process is often the most time-consuming part of finding new commercial real estate. If you’re open to moving outside your current area, research the demographics and economics of different markets. Conduct site visits and evaluate which locations align with your business needs. Even with a broker’s help, this process can take up to six months, especially when factoring in travel.
Step 4: Discuss with Your Current Landlord
Once you have a general idea of what you want, it’s time to talk with your current landlord. At this stage, you may still have 18 months left on your lease, but it’s a good time for negotiations. Your landlord might offer better terms to keep you or may prefer to let you out early for another tenant. In the worst-case scenario, you’ll lose an hour of your time, but still retain all your rights under the current lease.
Step 5: Tour Potential Spaces
Once you’ve confirmed your move, it’s time to start touring new spaces. Your commercial real estate broker will help find potential sites and arrange your tours. This process typically takes a few months as you narrow down your options.
Step 6: Negotiate and Sign the Lease
After finding the ideal space (and a couple of backups), you can begin negotiations. The length of this process varies depending on the market, so it’s best to allow a couple of months. This will prevent you from rushing into an unsuitable deal.
Step 7: Build Out the New Space
Once the lease is signed, you’ll need to build out the new space and install any necessary systems. Even simple build-outs can take 60 days or more, so plan accordingly.
Optional Step: Allow Extra Time for Unforeseen Issues
Smart tenants build a few extra months into their timeline. This buffer helps ensure that, if anything goes wrong, you’ll still have time to adjust your plans without stress.
Even after outlining all the information above, writing a letter of intent (LOI) can still seem daunting. That’s why the Leveraged CRE Team at Commercial Properties, Inc. is here to help locate commercial space for lease and assist in using a letter of intent to land such space. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
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Meet The LeveragedCRE Investment Team
Phill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets.
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