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So you’re a growing company that maybe got your start working out of your house, then did stints renting office by the hour, and are now leasing space in a co-working facility. However now as you grow your headcount you are about to embark on a new venture…….renting your own office space.
When should you start looking for office space? At a minimum for smaller users about 3-6 months before your existing lease expires or before your ideal move in date. For larger users consider starting 6-12 months before. There are a lot of factors involved in the timing however many businesses wait way too long to do so. You see finding and leasing office space is a time consuming process that always takes longer than you think. It maybe tempting to wait until the last minute (a month before your existing lease expires or when you employees are working on top of each other) however by doing so is going to cause a lot of stress and headaches.
You might get lucky and find exactly the right size space in the right location that does not need any improvements whatsoever, however most of the time that will not be the case. Even if a space didn’t need any changes that does not mean you will be able to sign a lease tomorrow and move in the next day.
In most situations after picking your favorite space you and your commercial real estate agent will draft up a letter of intent (LOI) to begin office lease negotiations. Here you will need to negotiate to determine who pays for what and when. Who pays for utilities, janitorial services, and other operating expenses? How much will your rent per square foot be? How long or short of a lease term can you do? What tenant improvement allowance will the landlord give and what all can it be used for? Will the landlord pay to have a test fit done by an architect? How will the landlord deliver the space to you? Can you get a renewal option or a first right of refusal in case you need to expand? How many parking spaces are you allowed? How much of a security deposit will be required? Can you get any free rent?
These are just a few things that have to be negotiated before you even see a draft of the office lease. As you can see there maybe a lot of back and forth before you even get to this point. Once the lease is drafted and the attorneys get a hold of it your looking at 1-3 weeks. After the lease has been agreed to and signed now you have to complete the design of the space and have it built out.
All in all from the time you start looking for space to negotiating the lease to having the space built out your looking at 3-6 months minimum. It seems like a long time however you don’t want to skip steps and end up paying more than you should. Consider hiring a good commercial real estate agent for help. Again if you’re luck and find a space that does not need any improvements whatsoever you can accomplish this in 1-2 months if you move quickly, however in most cases the spaces will need to be customized to your needs. So ideally you want to start your office space search at least 3-6 months before your existing lease expires or before your ideal move in date. If you are leasing a larger office…… say 10,000 to 20,000 sf then you would be wise to start the process 8-12 months before.
