Dr. Scott is a successful chiropractor in the Valley. He built his business in a prime location, doing all the right things to build a clientele. And then he made a horrible mistake. He renewed his lease on his own.
As soon as he signed, he was paying twice the going rate for office space in nearby complexes.
“The landlord was selling the building and I only had a few weeks to make a decision on whether to stay or go. I was too busy and felt pressured, so I just signed the lease and figured I would deal with it when it came up for renewal again. So here we are,” said Dr. Scott.
“Here we are” translates into him paying $3,200 per month when he should be paying closer to $1,600. The lease also included a clause that prohibited him from relocating within a three-mile radius of his current location.
I kept seeing these nightmare stories for business owners time and time again, and knew that I had to do something to help. So, I spent the past year putting together a book that provides money saving tips and a sure-fire 11 step guide to help businesses when leasing office, medical, industrial and retail space, before they found themselves in Dr. Scott’s position.
Below are a few things to remember when leasing commercial space:
• Tenant representation costs nothing for businesses and can save you thousands of dollars and help avoid major problems.
• Discuss your business plan and exit strategy with your tenant rep before touring space. This saves time, frustration and money upfront, allowing you to focus on your growing business.
• Underutilized office space drives up monthly rent. Determine how much office square footage is actually used and trim off the deadweight.
• If you want a high-end office, don’t rule out Class B office space. It is less rent than Class A office space and it doesn’t mean the building is out-of-date or lacking character.
• It is possible to convince a landlord to sign a lease with a tenant for less than the asking rate.
• Take your time on the final walk-through of your remodeled space, detailing the punch list. Enlist another eye to help you spot issues you might miss.
• Once your lease is signed, tag your calendar seven months before its expiration. This way you have time to negotiate the best lease rate possible.
When it comes to leasing commercial real estate, the landlord is the seasoned pro and you, the typical business owner is a rank amateur. If you are a business owner, doctor, lawyer, dentist, mortgage lender, dance studio owner or entrepreneur and treat leasing office or warehouse space like you are renting an apartment, you are courting disaster. The problem is, you don’t know what you don’t know until it’s too late.
Andrea Davis CRE, a nationally ranked woman-owned business, focuses on one asset class: commercial real estate. Davis is uniquely diverse in all aspects of commercial real estate, working with landlords, tenants, sellers and buyers with office, industrial and/or retail requirements. She is an expert in site selection, property comparison analysis, negotiations, and resourceful transactional follow-through from both viewpoints. The company has closed over $220M worth of transactions, totaling over 1.5M square feet and was recently voted one of the best businesses in Arizona by Ranking Arizona. She recently launched a new book called SimpLEASEity™ which is currently available from Amazon, both on Kindle and in book form.