There's a lot to consider when you're leasing a commercial space for the first time. The process can be complicated, and numerous factors could impact your final decision.
"The tenant has to think through lease location versus cost, lease terms and duration … and whether or not the office space … provides options for growth or expansion of the business," said Jeb Ory, CEO of Phone2Action.
If you think you're ready to rent your first office, here are three important tips to follow throughout the leasing process. [Location matters. Learn how to choose your ideal retail space.]
Understand what your business needs in a space – now and in the future.
Much like shopping for a home or an apartment, looking for an office can be simultaneously exciting and overwhelming. However, being prepared can mitigate the stresses of your search. Don't dive into the process without having a clear idea of what your business wants and can afford, said Bobby Goodman, co-founder of Truss, a company that helps businesses find office space.
"To make the process seamless and successful, I recommend taking pause and prepping in advance of the search," he said. "This includes knowing how you will use your space, what amenities are desired, and setting 'price guardrails' to prevent going over budget. Each office space will have different features, so it's important … to understand [your] priorities."
You should also consider your trajectory and objectives for the near future to make sure a potential space can grow with your company, said Goodman: "Before touring any spaces, companies should ask themselves where they see the business in one, three and five years."
Take your time.
When you need a new workspace for your growing team, you might think it's best to rent the first space that meets your needs. However, Ory says it's best to take your time and preserve optionality for as long as possible, which may mean embracing short-term leases while you search for your perfect space.
"Locking in a multi-year lease when your business is growing quickly can inhibit growth and possibly even require you to stand up two different offices at the same time, which can create logistical challenges and cost inefficiencies," he said.
Ory noted you may even be able to find fully furnished office subleases and temporary co-working spaces until you're ready for a long-term lease.
"Our company moved four times within a single WeWork co-working space before we moved out to our own office," he told Business News Daily. "We saved tens of thousands of dollars by taking our time to find the right space, rather than moving to a place in a hurry."
Review your lease agreement carefully before signing.
Unless you're well versed in real estate, you're likely going to run up against some confusing phrases in your lease agreement.
"Much of the needed information regarding the office search is communicated in industry terms instead of everyday language that tenants can understand," Goodman said. "For example, a tenant might understand 'total rent costs' but not a 'triple net lease,' which a broker might say."
Don't ignore these unfamiliar terms or brush them off – make sure you go over your lease with a fine-toothed comb, said Eddie Navarette of FE Design & Consulting.
"Ambiguity can be common when it comes to the terminology in leases," he said. "It may be unclear who is responsible for payments, and these details may not be uncovered until down the line when it's too late. Don't be afraid to ask questions to get what you want – no one cares about your business more than you do."