Stephen Gammer from the Gammer groups latest newsletter had some great tips for getting your perfect commercial Real Estate Deal.
Enjoy!
"The bumps in the road may be straight forward to those of us who work in this business on a daily basis, but if you are a business person looking at leasing for the first time, or the first time in 5 or ten years, careful planning and learning a few basics at the beginning can assist in setting your expectations and business plan in the right direction when it comes to accurate time frames and the leasing process.
To assist in the process of taking the dream from concept to reality
here are the 6 areas I've focused on in this column:
1. Plan Ahead
2. Site Selection
3. Lease Negotiation
4. Build Out
5. Length of Lease Term
6. Work with a Commercial Realtor
Six Tried and True Tenant Leasing Strategies
There are many strategies, industry signposts and market conditions tenants need to be aware of when entering into a new lease. Prudent planning and thoughtful processing is even more important as our local market and the world market work through some unexpected gyrations and predictions that range from wild to mild. So here are 6 strategies to assist tenants in making that business transition from concept to reality.
1. Plan Ahead - It cannot be said how important planning is in the development of any business. With a decreasing level of risk tolerance from investors, lenders, and even landlords everyone wants to make sure any venture they support is well thought out with a solid business plan. You need to show you have contingency plans in place for "what if" events and downturns in your market.
2. Site Selection - Give yourself enough time at the beginning of the process, say two months - depending on how specific your requirements are, to find a number of locations to check out before writing an offer or letter of intent. Retailers usually look for high traffic and visibility, while industrial users look for proximity to suppliers and major traffic routes. Don't fall in love with any location - this is business, keep your emotions out of the game and keep your options open. Remember that a good business in a bad location can easily turn into a bad business venture quickly.
3. Lease Negotiation - This is going to be part of your planning process that may vary widely: however you should anticipate that your negotiations with the landlord usually take from 2 - 6 weeks, starting from the time you have presented your offer, had it accepted and finally removed subjects.
4. Build Out - Depending on the complexity of what you need inside your space and how tailored it needs to be to fit your business you need to plan on anything from 2 to 10 weeks. Go to the city hall of the municipality you are going to be doing business, and ask how long they take to issue permits for building, demolition, and signs. As well, ask about the length of time it will take to get your get inspections for any work you've done such as building, electrical, and plumbing. The key to remember is when will you be able to have an occupancy permit and when will they issue you your business licence.
5. Length of Lease Term - While the vast majority of lease terms are either: 3, 5, or 10 years you may want to look at it in terms of months. I'm not talking about a month to month or 12 month lease but think about your business in terms of its cycles. If you are a seasonal business such as a retailer the prime time to enter a lease is in late fall to take advantage of Christmas, however you probably don't want to renegotiate your lease before the next pre-Christmas run up. Consider a 65 month lease so you aren't as busy and you aren't losing that space to a competitor.
6. Use a Commercial Realtor® - Be sure to have a representative working in you corner that knows the world of commercial leasing and can understand your needs and parameters. A Realtor® has a set of professional standards and ethics they must abide by to be licensed. Interview someone over the phone and ask them about their experience in commercial real estate, it isn't just a company it is a person that will be working on your individual file. Go to their website, and get a feel for who they are before you decide who will represent you. Something else to keep in mind is a Realtor® can work three different capacities as an agent: No Agency, Limited Dual Agency, and Exclusive Agency. Be sure to ask the question as to how this person is serving you. You can get more information about agency from the BC Real Estate Association website at: www.bcrea.bc.ca
The things to consider when looking at a new lease are varied and complex. You may know your business well, but be sure to get good advice about the process of leasing and consult with people in your industry, or other people that can assist you in the process"
Macdonald Commercial RES Ltd.
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