Doing Your Homework
Here are 25 things to consider if you are leasing new commercial space.
25 Essential Relocation Tips: Doing Your Homework
By Dave Richardson, McCall & Almy
- Review the landlord to determine their reputation as well as the satisfaction of other tenants in the building. Arrange for a face-to-face meeting.
- Review the management fees and compare between owner-managed vs. third party.
- Confirm what the management fee applies to. Fees can be levied onto the net rent, real estate taxes, operating expenses or tenant electricity.
- The new property leases should specifically exclude any salaries for managing the property above the property management level.
- Determine whether the rent for the property management office is only for the property in question, or whether additional buildings are managed out of the same office as well.
- Get a non-disturbance/recognition agreement from the lender. This protects the tenant in the event of a foreclosure by the lender.
- Determine landlord charges up front–elevators, loading docks, personnel, etc.
- Before signing a lease, determine base-op and tax.
- Ensure you have the rent commencement in writing.
- What does your utility agreement cover? Electricity for what?
- Get budgets showing building operating costs over the past several years to determine likely costs of operation. Landlords should provide this information, even if the building is new.
- What amenities do you need? ATM, fitness facilities, dry cleaning, sandwich shop, etc.
- Before moving, confirm if “extras” like parking are included in rent.
- Are there any costs for after-hours operation, such as HVAC equipment?
- Does the space fit your needs as-is, or will it need renovations/improvements?
- Does the landlord offer a T1 credit for improvements/renovations?
- How is the T1 allowance funded? If it is not used, can it be applied towards rent?
- If performing renovations, is the landlord offering a tenant allowance, advancing a specific dollar amount or offering a turn-key deal where they pay for an agreed scope of work?
- Does the landlord plan to provide “green” features or other environmentally friendly improvements?
- Discuss signage. If you would benefit from having signage, request it. If the landlord declines, then ensure that he/she agrees to not offer signage to a competitor who might lease space in the same building.
- Measure the space. Loss factors (the difference between useable and rentable) vary greatly between buildings.
- Parking ratio – does the property offer enough spaces for your employees and clients?
- Public transportation: prepare a map for your employees before the move-in day.
- Determine if another landlord will include more standard services with your lease, and if not, what the likely range of fees will be for different services.
- Ensure your business is ready for a larger or newer space. Determine what your needs are – larger space or better lease terms. Economy is forcing landlords to be competitive and offer better terms and amenities.
About the Author
Dave Richardson is an executive vice president & principal with McCall & Almy, a Boston-based commercial brokerage firm providing trusted real estate advice and services. He can be reached at [email protected].