Contrary to what a lot of people think building owners and landlord do not lease commercial space to just anyone, regardless if the space has sat empty for 12 months or more. They typically have a qualification process that can entail reviewing tax returns, background checks, credit reports, checking references, or having a good gut feeling about the prospective tenant. In a tenant’s market landlords are typically more flexible, however in a landlord’s market they are a lot more selective when it comes to financials, etc…
In many cases business owners and companies do not prepare themselves before leasing office space. First impressions are everything and if a landlord thinks you will be a risky tenant you’ll end up losing out on potential concessions (rent, rate, improvements, etc.), or the landlord just won’t lease to you altogether. To help you better get better prepared below is a typically checklist that a landlord may use to qualify you. Follow this and you will increase your chances of getting a better deal and terms.
- Completely fill out the lease application – If the landlord gives you this fill it out completely. Sounds silly however many people turn them in incomplete which can set the tone for how the landlord perceives you.
- Provide a business plan – If you are a new business give the landlord a business plan. This shows you know your business, competition, budget, projected sales, etc..
- Background Information – Landlord’s like to know about your business background. Do you have what it takes to make this business successful so you don’t default on the lease? If so PROVE IT.
- Assets – Do you have strong financials? Do you have enough cash to run the business until it starts making money? Do you have enough money left over for operations after you pay the security deposit, first months rent, and tenant improvements?
- Strong Credit History – Have you consistently paid your previous bills on time? We all have had some bad moments in the past however if you have been repeatedly late on credit card bills, loans, etc you need to clean that up.
- Advisors – Having a good tenant representative and attorney in your corner can show the landlord that you are serious and that you have experienced advisors that will ensure that no details are overlooked.
- Ask good questions – Show the landlord that you have done your homework by asking good questions. If you just ask the obvious questions they know you are not experienced.
- Know your needs – Landlord’s don’t want to waste time with someone who is not serious or know their needs. You need to have a good handle on your current and future space needs, utility needs, zoning needs, budget, etc. It’s also a good idea of have an idea of what is typically negotiable and non-negotiable so you don’t waste everyone’s time trying to negotiate non-negotiable items.
- Be prepared to move quickly – In a hot market spaces get leased fast!! If you find the right location focus on getting it secured or you risk losing it to someone else. If there is one or more parties interested in a particular space the landlord will go with the group that is prepared, qualified, and able to move more quickly.