If your business has outgrown your den, you may be looking to rent commercial space. While the specific rights & responsibilities of commercial tenants vary from state to state, unlike renting an apartment, there aren’t myriad lease stipulations that the owner must adhere to. Therefore, it’s up to you to ensure you receive the best terms for you and your business. Bottom line: take the time to discuss all of the terms of the agreement before signing on the dotted line. This will ensure that you have the leverage you want throughout the life of the lease.

Before you sign the lease
When it comes to the lease, don’t go it alone. Consult with your attorney to review the document and prepare a negotiation strategy. Since there aren’t as many restrictions on commercial leases as there are on home properties, you have more room to discuss the terms of the lease. . The landlord is a businessperson too—he/she will start the bidding with terms most favorable to him or herself, but will likely meet you somewhere in the middle to make the deal.

Negotiating rent
Unlike rent-controlled apartments, commercial property owners can charge whatever they like. It’s up to you to find out how your rate compares to those of neighboring businesses. You want to negotiate on the following terms, even if you think the answer might be “no.”
–         Get a stipulation in writing about how often your landlord can raise the rent, on what terms and by how much.
–         The lease should state who pays utilities.

Insurance requirements
While the building owner has insurance to cover the property, this might not benefit you. Ask him/her if existing coverage will include any of your business assets (i.e., equipment, merchandise).  You may be able to negotiate for the landlord to handle some of the burden, but you should probably plan on purchasing coverage yourself.

Building repairs
The lease should state who is responsible for making repairs to the property. If property owner won’t cover them, at least negotiate reimbursement for necessary repairs.

Options to renew lease and purchase the building
How many years are you tied into your lease? Do you have an automatic option to renew? If you think you’d want the option to purchase the property someday, put it in writing. By doing this up front, it will likely help you get a better deal if and when the time comes.

Other lease considerations
Non-compete clauses, termination and dispute resolving conditions, expansion and subleasing options are other lease considerations that you and your lawyers should look at carefully before signing.
Don’t think of your lease as eternally bonding; you might decide to move your business, and you will certainly have a chance to renegotiate the lease down the road. For example, if changes in the neighborhood adversely affect the volume of people coming in the door, that’s a reason to try to have your rent lowered or to receive some other sort of compensation.

No matter if you are an entrepreneur, a startup business, a small business or work for a larger corporation in a satellite office location, executive office suites are often the best solution for your office space needs.  Executive suites offer turn-key services beyond the office space and furniture.  They often have mail services, secretarial services, voice and data services as well as shared conference rooms, kitchens and break rooms.

While you often pay a higher rent for these office suites they also tend to include many products and services and eliminate the ‘hassle factor’ of coordinating those services.  Also, they tend to offer monthly lease terms which can be a huge benefit especially when your business is new and the future is unknown.

Rofo has aggregated all of the executive suite office spaces in one place in order for you to do a real side by side comparison for the best space, location, amenities and services for your business. .

The news doesn’t stop about the slowing commercial real estate market for 2009 and 2010.  It’s a reality and we saw it coming a long time ago.  Job growth slows and there’s less absorption.  Consumer confidence wanes and retailers struggle.

KTVU News in the Bay Area recently reported on the latest numbers and the current struggle for retailers.  We were very pleased to have Rofo included in this piece.

But despite the news and the numbers Rofo continues to reach out to new markets to provide entrepreneurs and small businesses the much needed tools to make informed real estate decisions.  We’re excited about our recent expansion to include the Sacramento Office Space, Sacramento Retail Space, and Sacramento Warehouse Space markets.

Stay tuned for more exciting announcements and added services for local businesses and entrepreneurs on the move…

Had a great meeting today with the folks at the Presidio Trust.  We appreciate their participation with Rofo.  Leasing Presidio office space is unique in several ways.  The setting is unique and one-of-a-kind.  Not only are most of the buildings historic but the restoration of the spaces has been really well done.  One of the newer spaces for lease is 1806 Belles Street.  These are executive suites Presidio style.  The building is located just inside the 15th Avenue gates.  Extremely close to Park Presidio so easy to get to.  Its also surrounded by hiking and running trails and the onsite shower doesn’t give you any reason not to get out there on your lunch break.

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Many thanks to Mike Gschwend for sharing an overview of the Jackson Square office space market.  Personally, it’s one my favorite neighborhoods in San Francisco and also one of the more competitive submarkets in San Francisco.  The neighborhood has been a popular spot for creative firms and the hedge fund crowd.  If the commercial real estate market does what everyone is predicting it will do next year (read get worse) then 2009 may be the year to find a decent value in Jackson Square.

Potrero Hill in San Francisco has been home to many great companies (both large and small) over the years.  Companies have always found Potrero Hill as a great alternative for office space and industrial space in San Francisco.  The neighborhood is defined by its diverse make up of buildings and commercial uses.  It’s home to creative firms, tech companies, startups, and design firms.  Companies are typically attracted to the look and feel of the neighborhood and spaces, the relatively cheaper rents and the proximity to transportation.

Our friend Jonathan Heaton generously contributed this neighborhood video describing the specifics of the Potrero Hill commercial real estate submarket.

If you perform a search for small San Francisco Office Space (less than 1,000 sqft) on Rofo you’ll find many compelling options.   These spaces tend to be short term, furnished and ready to go.  All very important things for an entrepreneur in today’s environment.  But remember not all square feet are created equal.  Depending on the layout and actual usable square feet you’ll fit somewhere between 2 and 5 people in a 1,000 feet.

I’m writing about the San Francisco Bay Area real estate market but you could probably insert any city name.  I’m asked often these days, “What is really happening in the commercial real estate markets?” There’s certainly been a lot of news coverage on the macro level so I thought I’d offer up some specific anecdotes and try to piece it together with some conversations I had this week.

Institutional Landlord: “We do not anticipate signing any new leases through the end of the year.”

Top Broker: “Business is dead.  We’re trying to renew deals that are 18 months out.”

REIT: “If you’re a sizable credit tenant we’d give you just about anything you ask for.  And, if you’ve invested in our fund you’re probably not very happy with us.”

Tech Company: “We just cut our staff in half, froze capital spending and preserving cash.”

Broker: “I heard Myspace and Microsoft are both in the market for significant expansion space.”

Angel Investor: “Due diligence on investment deals is taking twice as long.”

Large Developer: “2009 looks a lot worse than 2008.  And we’re flat lining now. It will be a great year to buy on the cheap.”

So what does this all mean?  Well capitalized landlords and developers will take advantage of a down market in which tenants with credit and good visibility will dictate the leasing terms.

The team over at Alltop has added our blog to their virtual magazine rack of real estate blogs

The site is a very good resource for easily finding the top content in many categories.  I’m personally a fan of real estate and small business. . .

Besides negotiating the rental rate for your new commercial space, there are other creative ways to minimize your overall financial commitment  in your lease agreement.  I recently had the opportunity to contribute an article to Gigaom highlighting 8 of them.  It ranges from capping operating expenses to obtaining flexible subleasing rights.  Naturally a lot of this depends on market conditions and available commercial real estate listings.