Articles About Commercial Real Estate

Move in Checklist

The process could take 18 months or 2 weeks. The search process and completed lease should be completed 30 days
prior to the move date. Below is your game plan for the last 30 days:

Countdown Begins:

...

YOU NEED TO MOVE IN 2 WEEKS! Follow the timeline below for your best chance to keep your co-workers from having to work out of your kitchen!

1. Search Actively: Be very proactive with your search for the ideal space. We suggest both searching
and posting your need on Rofo, as well as making calls to your contacts to make sure all potential commercial real estate spaces come to you.

2. Expand the Search Area: We suggest opening up your search to surrounding neighborhoods to ensure you
find the nicest office. The commercial real estate market is based on timing. Give yourself the best opportunity to find deals that are off the market or are being prepped for listing.

3. Improvements: While looking for space, focus on spaces that will need the absolute minimal improvements
needed for you to move into. Think about improvements that could be made while you were in the space if necessary.
If new paint and carpet is needed, you may have time as long as you aren’t picky on the type of carpet.

4. Furniture and Wiring: Ideally, locate a space that is both furnished and wired and avoid the hassles that come with the long-lead items like furniture, DSL and wiring equipment. If you can’t, schedule your appointment with the phone company with a site to be determined by that date, or give your current address and change it once you have your new location determined.

5. Neighborhoods: Focus on neighborhoods that you are familiar with so you don’t need to spend time educating
yourself on the ideal location within a neighborhood. Ask your coworkers about buildings and neighborhoods they like.
Share your listing ideas with them via Rofo’s Listing email option.

6. Holdover at Current Location: Beg your current landlord to hold over without bearing the cost of increased
rent. Check your lease for the Holdover Rent clause and negotiate with your landlord to avoid it.

7. Moving Companies: Find one with one week remaining to your move in date. Use one of Rofo’s recommended
Movers who have specified quick move ability & feel free to use our name.

The Landlords View
(or the 5 questions landlords will asks about you)

1. What is the credit of the company I am signing a lease with?
Most landlords have loans in place, and at times, their lender will
ask to approve a lease before it is signed since they are technically
part owners. If a landlord wants to refinance a building, a large part
of the valuation of the building will depend on the building’s rental
stream and the likelihood of the rental stream continuing (e.g. your
financial picture and credit history). Some landlords will not be comfortable
leasing spaces to start-up companies because of this credit risk.

...

3 Ways to Negotiate Lower Rent

Besides claiming that you are a young, growing, and cash strapped business that the landlord should
help at the goodness of his heart, here are a few methods that can help.

1. Fair Market Value: The first one was to discuss the other spaces you are looking at using the
real financial terms with the broker and or the landlord. Once they realize you might go elsewhere,
they usually will attempt to cut to the chase and put their best foot forward.

...

Term sheets are used to establish the basic business terms of a commercial lease. It's common practice to establish the business terms prior to negotiating a commercial lease (which is a legally binding document).

Following are the common business terms addressed in a term sheet:

PREMISES:     This typically defines the location, size and address of the space you are leasing

TERM:     This defines the length of the lease and the approximate date that the lease commences

RENTAL RATE:     Defines the initial lease rate and any increases (typically annual). This is also the place to define the type of rent (fully serviced, industrial gross, triple net).

...

Sample Letter of Intent (LOI) or
Memorandum of Understanding (MOI)

Not legally binding but spells out the intent of the legal agreement. This is often a precursor to a lease agreement to minimize legal expense prior to reaching consensus.

...

It’s not just about location. Below are the common factors that influence a business's decision about where to locate:

1.    Location, Location, Location: Not only a real estate adage, but a fact of life.
The location is usually described as the either the biggest benefit or biggest negative.
This includes both the neighborhood as well as the building’s location within the neighborhood.

2.    Commute Patterns: Take a preliminary survey of your company’s thoughts on their current commutes.
Employees may consider quitting if the new commute increases significantly in time, or expense.

...

Touring Checklist   
Completed Notes
    Pricing:    
    1. What is the $/square foot   
    2. Is that annual or monthly pricing?   
    3. What does the pricing include?   
  

...

What to Consider When Hiring a Broker

1. How active is the broker in the marketplace?
If the broker is active in San Jose, but has never worked in Oakland, where you're looking for office space, it could be a mistake to hire him/her. If they can prove to you that they have the ability to find the tough to find spaces and get information on the most recent transactions. If they can pass both of these hurdles and seem qualified, an out-of-town broker can provide the right level of service. If not, ask them for a referral to a local broker.

 2. How long has your broker been in the biz?
Less experienced brokers may work hard but may expose you to common mistakes. Industry veterans can quickly make you aware of the pitfalls and help you avoid them. After about three years in the business, a broker is usually seasoned enough to have learned the tricks of the trade.

 3. Check out references
Ask to speak to recent clients who can vouch for their diligence and honesty throughout the process. Ask about their negotiating skills and time spent on the process.

 4. Are you looking for a Specialist?
Many brokers specialize in types of firms or industries.  If you can find the broker who specializes in your industry (biotech, retail, restaurants, etc), you may get a leg up in the negotiation. 

 5. Conflicts of interest
Some brokers might work for many landlords throughout the city. If they do, at times their fiduciary duty is challenged when they represent both parties. Most brokers are ethical and this would not create a bad situation, but exceptions do exist.

Top 10 Ways to Negotiate for your Commercial Space

1. Move in Date

If a space has been vacant for a long time, the owner is usually more willing to deal. If you can’t meet the landlord’s rent needs, but are willing to take the space right away, the landlord might be more willing to bend on the rent.

...