Opening a coworking space is going to be great she said. There are tons of commercial spaces that have been sitting dormant for years now just waiting for an innovator like you, she said. They are going to be excited about turning some boring corporate shell into a cool space, she said. She lied.
Who is she? She is this chipper, anything is possible, just do it, crazy woman that lives in my head. She puts images of grandeur in my head day and night and does not stop until I do what she wants. I am going to find her one day and kick her ass.
Towards the end of 2011 I started looking for that perfect space to open my super cool coworking space, I thought it would take 3 or 4 months, I didn’t get it until the end of 2012. It didn’t take me that long to find available commercial space that would work, I found so many that would be great, it took me that long to find one that really wanted a tenant. We have tons of open commercial space in my area that have been without tenants for years but it seems that most would rather take the loss then the hassle of a new tenant with images of grandeur in her head.
First thing you should know is that leasing commercial office space is a full time job, not just for your agent, but for you also. You will need to look at quite a few places before you find one that meets your needs and then you will need to look at many more until you find one that meet your needs and your terms.
Things You Need:
- Great Real Estate Agent
- Insurance Agent
- Design Team (Contractor, Architect, Interior Designer, Commercial Space Planner)
- IT Professional
- Security Company
GREAT Real Estate Agent
You need an agent that is knowledgeable, has good listening and retention skills, available, and is aggressive. Your agent should know the industry very well, that is a given, but he or she should also know the area and the players. When an agent knows how long properties have been vacant, who owns and manages the properties and what they may need or want, and what has been happening in the local area it gives you a leg up in the process. Listening is great but retention is even better, I found that most of what I wanted and needed was heard but many key items were forgotten or overlooked.
For us this space was for an existing business and the start of a new business. I needed a property that would not have a problem with 30 or more people coming to our office space at once – parking is of short supply in most commercial leases, that was large enough for everything we wanted in the space, the right location, the right price, and would include a tenant improvement in the lease price. On top of all of that I needed an agent that understood that time is of short supply for me, so only show me properties that fit my criteria and do it in bulk.
I didn’t realize how important the aggressive component was until I was in the lease negotiation portion. Most agents will get you some free month’s in your lease term, that is standard but negotiating the tenant improvement, lease rate, and other hidden items in that lease needs a person who will not only ask for the moon but knows how to get it. Also speaking to current tenants in the building is a must, they will give you information that will help you win the negotiation game.
I thought all we needed was an agent to get our space but it turns out that an attorney is part of the equation. The attorney looks at the legality of what the property manager is offering, it is their job to ask you to give up as many legal rights as they can to give the biggest advantage to the building owner. The attorney looks at your liability in the lease and in worse case scenarios, and the impact of the lease to you and your business. If we hadn’t had a lawyer we would have agreed to quite a few things that could later come back and bite us.
Every lease requires that you carry insurance so you will need a good insurance agent that can help you cover you, your business, the office space, and employees and visitors.
You don’t absolutely have to have the contractor, architect, interior designer, or space planner but it helps if you do. When you find a space that you think may fit your needs they are the ones that can tell you what tenant improvements you will need to realize your vision. The management company will usually have a contractor and architect that they work with and you may have to also work with, but having your own team to consult before and during the process will save you a lot of time, headaches, and money.
If you do not need to do any tenant improvement then you don’t need a design team, but if you are looking at converting a space into something else even if it is just new carpet, paint, and moving some walls you will someone who has a background in commercial tenant improvements to talk to. Tenant improvements are not easy, they go over time and over budget just like home improvement projects, but it is worse when you are relying on a design team that works for the property management company. Make sure the design is done and approved before you sign the lease, make sure the budget and/or finishes are agreed upon before the lease is signed, and set in some contingencies if the tenant improvement is mishandled resulting in lost revenue for you. Knowledge is power and it is worth it to pay a team to consult with you during this process.
There is so much to know about getting Internet into a space, from the wiring coming in from the provider to the wiring inside your space, to the technology that makes it all work and keeps you safe. Speaking to an IT professional before you sign the lease is a good idea, they can tell if you if you are going to incur some cost in updating or upgrading wiring to meet your needs.
If you are going to install cameras, keyless entry, or even if you just want to see if the security system in place is adequate you should have a security company to call.
You are going to go into this with hopes and dreams and you are going to come out with scrapes, bruises, a black eye, and a lot of knowledge. Knowledge that would have been great to have had in the beginning. You cannot prepare for everything that is coming your way in commercial space leasing and tenant improvement but you can learn as much as you can before and during so that you only come away with a few scrapes and bruises. To obtain this knowledge talk to a lot of people, read some books and blogs for terms and definitions, and ask a lot of questions. You may think that asking a question makes you look stupid, I think not asking the question makes you stupid and that is much worse!