When it comes to negotiating Austin Office Space leases or lease renewals most Tenants assume that Listing agents have their best interests in mind and will give them the best deal possible.  Contrary to that belief the Listing Agent works for the Landlord who is paying them a commission to lease the space for the highest rent possible.  For this reason it’s important to be prepared to negotiate aggressively to keep the office rental rate down. 

 The following are a few ways to ensure you get the lowest possible rental rate on office and commercial properties in Austin:

1. Consider hiring a competent Tenant Representative who specializes in Austin Office Space Leasing.  Since they are active in the market every day they know a good deal when they see one and can give you peace of mind while saving you a great deal of time and money.  Just like you are an expert in your business they are experts in office and commercial leasing in Austin, Texas.  You are not typically charged a fee to use the service of a tenant representative because they split the commission that the listing agent has already negotiated with the landlord.  So why not put some of this money to use for you? 
2. Talk with other tenants in the building – You can learn a lot about the landlord’s track record of how they manage/service the property and how they treat the tenants.  Other tenants are typically willing to share their experience, whether they plan to stay or move, and if their rent is too high.
3. Look at other options – Even if you would prefer to stay where you are it’s important that you research other options.  You never know…you might end up saving thousands by relocating your office.  It pays to create competition for your tenancy among several landlords. 
4. Flinch - No matter what lease rate you are offered always act surprised that quoted rent rate is high.  If you act like the rate is not a big deal then you lower your chances of reducing it.
5. Expect Counter offers to go back and forth – In most cases the Listing Agents first offer is never the best offer.  Do not get offended if their first offer is not what you expected.  In most cases counters offers may go back and forth a few times before all parties have agreed to terms.  Negotiating is a process, not an event. 
6. Be prepared to walk away – Try not to get emotionally involved in an office lease deal.  If you don’t like it……walk away.  In some cases I have had clients walk away from deals and seen the landlord come back two weeks later with a better offer.  If you don’t have other options and get too emotional you lose negotiating leverage.

The first Austin commercial office lease that was ever negotiated was probably as simple as a handshake based on just a few business points.  Over time however, as business issues became more important and Landlords became smarter about protecting their investments office leases evolved into what they are today………..boring, complicated, and hard for a business owner to interpret.

Simply put Office & Commercial leases basically cover 3 things: 1. what the parties want to happen, 2. what the parties want to prevent from happening, 2. or what might happen based on their experience of what has already happened.

The trick to understanding an office lease is to read the lease with a purpose.  As you read each clause, ask yourself: “How could this provision or paragraph affect my business in a negative or positive way?”  Most commercial office leases contain the same basic provisions however they may not appear in any particular order and scattered throughout the lease. 

While there are a lot of important clauses some clauses are more important than others so don’t get hung up on everyone of them.  Focus first on those that will have a direct financial impact on your business and then those that have the potential to affect you financially.

At then end of the day I always recommend that you hire a good real estate attorney to check your work or do the entire lease review for you.

If you have any questions about Austin Office Space or reviewing Office leases please don’t hesitate to contact us.

Do you know where your Austin Office Lease is?  More often than not, after a lease is signed the commercial documents are stored away and never looked at again until it’s too late to negotiate a good office renewal with your landlord. Deadlines built into the lease are often overlooked causing unforeseen expenses and inconveniences. To avoid having this occur to your company, Austin Tenant Advisors recommend the following key steps to take: 

Know your office lease commencement date and lease expiration date

Most leases require that you give notice of your intent to renew your existing Austin office lease, typically within 30-180 days. The last thing you want is to miss that deadline with the landlord leasing the space to someone else, thus giving you insufficient time to relocate; or even worse, having to move unexpectedly. Even if you are committed to relocating, giving your landlord sufficient notice will help you preserve that relationship. You never know if you will need to stay in your existing space an extra month or two while your new space is being built out. 

Maintain critical commercial lease information

Lease Documents:  it is imperative that you keep all commercial lease documents organized and filed away (hard copy, soft copy, or both) in a place where at least two people can easily retrieve the info. This includes all lease agreements, addenda, amendments, exhibits and side agreements (e.g. NDA’s and estoppels). 

Negotiation History: Most lease documents might seem unclear causing you confusion when a specific issue arises.  Notes and prior drafts of the documents can save hours of time when you are trying to ascertain and explain the intent of a particular clause. Make sure to document all conversations during negotiations so you can reference them later.   

Bills:  Most leases contain operating expense, tax and other pass-through clauses as well as requirements that the tenant pay for sundry items not covered by the rent.  The bills for these items all make their way to accounts payable, but many corporations do not save copies in their real estate files.  This makes an analysis and comparison of charges to lease requirements close to impossible.  With respect to the escalation charges, copies of all annual reconciliations should be filed away. Copies of sundry charges should similarly be scanned if the originals are to be sent to accounts payable for processing.  

Correspondence:  Preserve copies of all letters, even though they may not rise to the level of legal agreements.  Letters can give those reviewing the file a better picture of the overall relationship between the parties. Leasing commercial space will be one of your most expensive overhead items for your business. Make sure you are prepared and understand your rights as a tenant by knowing your lease deadlines and keeping track of your lease contracts.  

You worked hard to negotiate your office lease…..don’t lose control of it! 

To lease office space in Austin visit www.austintenantadvisors.com or call us at 512-861-0525.  We will help you find the right Austin office space at the right price and ensure that you properly store your office lease.  There is no fee for our service so why wait to contact us for help?

Leasing Austin Retail Space?  Make sure you do your due diligence before signing the lease.

Recently I was sitting in a city planning and zoning committee meeting and a small business who had recently leased Austin Retail Space was asking for a variance to the building signage requirements.  Both the City Zoning Ordinance and the property owner had established the sign criteria to be no more than 30 sq. ft., however the business owner was asking for a variance of 36 sq. ft. for his sign which he had made prior to signing the lease at a cost of $4,000.  After 30 minutes of discussion the city reluctantly did not approve the variance request.  Now the business owner will have to have another sign made and spend another $4,000. 

While this might seem unreasonable the City felt it necessary to follow their codes.  Why?  Well, for one the sign standards have been selected to harmonize with and complement the building materials and other commercial properties in proximity and will assist in creating the proper atmosphere for the center.  Additionally if they approved his variance then what expectations are they setting for other existing or future tenants?  If they do it for one person than the others would expect the same treatment. 

How could this have been avoided?  For one the Tenant or the Tenant Representative (if applicable) should have carefully read the lease agreement.  The lease agreement should always have language that defines the signage requirements for the Austin commercial property.  If not then the Tenant should go to the City and find out the material specifications, construction details, and specific signage requirements.  Regardless of whether or not the Landlord has defined the signage requirements it’s always a good idea for the Tenant to check with their respective city zoning ordinance and codes also.

A few tips to consider when designing signage for your Austin retail business:

1. All signs are subject to the City Zoning Ordinances
2. Each Tenant is responsible for its sign conforming to the applicable ordinances and codes.  Each Tenant shall be responsible for obtaining all required permits prior to the commencement of installation
3. If you have any questions regarding material specifications or construction details, or the City of Round Rock sign allowances,
4. Any deviations from these sign criteria are subject to prior written approval by the Landlord.  Landlord has the right to waive any provisions listed herein.  Waiver in a single instance shall not constitute a waiver to any other tenant.
5. Any deviations from the Landlord’s sign criteria are subject to prior written approval by the Landlord.  Landlord has the right to waive any provisions listed herein.  Waiver in a single instance shall not necessarily constitute a waiver to any other tenant.  Waivers are subject to the applicable City codes and ordinances.

You are about to embark on one of the most important aspects of your business’ existence, locating Austin office space.  Whether it means finding a new lease or renewing an existing lease, your office space will have a major impact on the success or failure of your business.  Leasing office space is typically a company’s second highest expense right behind salaries and employee benefits.  In fact, for many small to midsize companies, this will be the highest fixed monthly expenditure.  This is why it’s important that prospective tenants begin the space review process early, ensuring that the process of planning, hiring, finding, negotiating, implementing, and relocation gives the tenant the best opportuntiy for success.  Whether you plan on finding a new office space lease or renewing an existing one by planning at least 8-12 months in advance, time will be your ally, not your enemy.  Additionally if you plan on renewing your office lease it’s important that you follow the same process as if you were leasing space for the first time. 

Essentially there are 4 basic stages of the commercial office leasing process:

1. Planning Stage – Here you must determine whether you want to renew your existing lease, relocate your office, or are open to both, whichever makes the best economic sense for your company.  You also need to determine your current and future square footage needs, establish your budget and time line, define your ideal location, and identify any technical and amenity requirements. 
2. Market Research -  Working with your broker begin to survey the market to evaluate office space alternatives, including your existing space and and tour the most desirable office options.  Once you have seen other options and compared them to your existing space you will be able to do a side by side comparison on all properties and select the top 2-3 that most address your needs.
3. Negotiating Stage – Request lease proposals, including an office lease renewal from your existing landlord and perform a lease analysis to compare each properties financial points and other physical and operational attributes against your ideal criteria. After a few rounds of counter negotiations you can then select the option that best meets all of your Austin office space needs.  The lease contract can then be drafted, reviewed by your legal team, and executed.
4. Construction Stage – If your space requires any modifications (which in most cases it will) you will then work with the landlord, contractor, and architects to develop a space plan according to the specifications agreed to in the lease.  You will also begin the process of engaging vendors such as internet service and data cabling, furniture, movers, etc..

As you can see, the Austin office lease process has numerous components that, when implemented effectively, can require 8-12 months for a smooth adn cost effective relocation.  If in the event you are short on time, there are some short cuts, however they can cost your business money and negotiating power.  A solution to this scenerio may be to limit your choices to only those buildings with available spaces that require limited or minor modifications, or looking for office subleases that meet your needs exactly.

Regardless of the path you take, whenever possible, it’s important to start the 4 stages early enough to allow yourself the maximum amount of time for gathering information and making the best decision.