This is a guest blog post. My friend, John Heimbigner, wrote this in 2018. He graciously gave his permission to post in on my site.. It is still very relevant today. Peter

Hand offering a pen to sign a commercial lease.

An agreement between a business and a landlord is defined as a commercial real estate lease, with each agreement coming with its own restrictions, stipulations, and features that are negotiated during the final signing process. But before the ink is wet and you start calling moving companies, new and first-time business owners learn quickly that signing a commercial real estate lease can be a complex and lengthy process – especially if you’re operating in a competitive city or market.

Before you begin your search, you’ll need to be equipped to handle the ins and outs of the entire process from start to finish to find the right commercial real estate lease that fits the needs of your business and your budget.

Determine Your Commercial Real Estate Needs

The first thing you’ll want to do is to take a serious look at your company’s needs in a new or first-time commercial real estate space. Depending on your location, there are likely hundreds of vacant spaces available within the major commercial corridors of the city, each with their own perks and drawbacks. Coming to the table with a list of basic requirements for your company will help narrow your search and better inform any real estate professionals you may choose to loop into this endeavor (more on this later).

Before beginning your search, consider the following aspects of your needs:

Property Type and Zoning

An easy first-step is to start by eliminating spaces that don’t accommodate your specific use-type. For example, if you’re looking for a traditional office space, there would be no need to consider a commercial space built-out for a restaurant. While this seems like a no-brainer, understanding how your company will want to use the space available to them is an important consideration before beginning your search. If your business has a unique service requirement, you may also need to check local zoning codes to learn more about the regulations and restrictions present in your city.

Location

If your business relies on heavy foot traffic, you probably don’t want to open up shop in an industrial or up-and-coming development in your city. High profile businesses should always consider a city’s commerce or financial districts to ensure maximum visibility; however, smaller businesses or those utilizing warehouse space should also look further out from the city’s core to increase options and affordability.

Accessibility

If you rely on employees conducting business in the office, ensuring your new space is easily accessible to their commute and parking needs should be a high priority for you. If you’re hoping customers will wander by on foot and visit your store, for instance, you’ll want to make sure your space is easily visible and accessible on foot.

Employee Requirements and Perks

On average, most commercial office spaces should provide about 150-300 square feet of space per employee. If you’re like many startups or first-time ventures that have grown at a rapid pace, your employees are likely crammed together and uncomfortable in their current environment. If you’re planning to compete with employee-friendly heavy hitters common in the tech world, you’ll need to consider spaces with amenities like gyms, cafeterias, and shared communal areas as well as a location with plenty of space and parking.

Maximum Monthly and Annual Budget

Of course, the most important and crucial factor in your commercial real estate search will likely always be the overall cost of the lease. Look first at the cost per square feet – a common metric for commercial real estate leases – to determine how much you can afford over the course of a year and each month.

Using a Commercial Real Estate Broker

Before diving deep into your search, you should take the time to assess whether or not you need the help of an expert. Having a professional commercial real estate broker who specializes in tenant representation assist you during your search and negotiations can be incredibly beneficial – not only for guidance but in ensuring the best solution for you and your company’s needs. After all, a tenant rep broker’s fee comes out of the lease agreement at the end, so bringing someone on can only be a benefit to you.

Alongside working with a broker, many growing companies will also choose to appoint an operations or HR manager to provide the closest, most intimate knowledge of the company’s location requirements when conducting a commercial real estate search.

Types of Commercial Real Estate Spaces

There are five common commercial real estate use-types: office, retail, industrial, land and multi-family.

As a rule of thumb, it’s probably not the best use of your time to be looking for a restaurant space if you’re a tech startup or visa versa, so narrowing your search to properties that accommodate your desired use-type can be a big time-saving endeavor.

The Different Types of Commercial Leases

In general, there are three types of commercial real estate leases you’ll encounter once you have found the right property for your business:

Full Service Lease – The most common type of commercial lease used for office buildings. Full service leases mean the rent is all-inclusive, allowing for businesses to pay a flat rate on a consistent basis without having to worry about utility costs, repairs and maintenance, or property taxes.
Net Lease – Net leases typically cost less than full service leases, but could charge for common expenses like property taxes, insurance, or maintenance costs.
Modified Gross Lease – A mix between full service and net leases, modified gross leases allow tenants to pay for their portion of common costs in a lump sum. The difference is that these costs are fixed in the lease agreement, whereas in net leases the costs for tenants may increase as those costs increase for the landlords.

Negotiating Commercial Real Estate Leasing Terms

Once you’ve identified several potential properties, conducted walkthroughs, and learned more about the lease terms associated with each property, it’s time to choose your top properties and begin the negotiation process. It’s important to request each version of the terms in writing, which you can obtain through your broker. For each follow up offer or counteroffer, prepare a business letter of intent and deliver it to the landlord or their real estate broker.

While every letter of intent (LOI) is slightly different depending on who drafts it, the letter should generally include the following:

Your contact information, title, and business

The address and space of the property you intend to lease

Your proposed (or counter-proposed) terms of lease

The rental rate

A summary of any improvements, including any tenant improvement allowances

If you require many specific or nuanced terms to your commercial real estate lease agreement, the negotiation process could take much longer than you might think. However, because it’s important to remember that a speedy conclusion is in the best interests of both parties in the agreement, prioritizing your must-haves, medium-priority, and low-priority features, perks, or terms is an essential element of the negotiation process.

Should You Lease or Buy Commercial Real Estate?

If you’re a small business, growing into an additional space, or expanding your operations, it’s likely that your ideal commercial real estate space is a lease. However, if you’ve grown into a multi-million dollar venture or require very specific features to your company’s buildings, buying real estate outright can be a more attractive endeavor – if you can stomach a considerably more expensive initial cost and can eagerly anticipate routine upgrades, maintenance, property taxes, and utility expenses.

Now that you’re equipped with a greater understanding of the complex world of commercial real estate leases, you can start the fun part: the search itself! With so many incredible options in the modern commercial market, finding the perfect fit for you and your company should be an enjoyable and exciting adventure.

 

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  • Knowledgeable, attentive buyer and tenant representation

  • Every viable location considered

  • Every lease-concession opportunity implemented

  • Your space requirements satisfied with zero mistakes
     

Forty-plus years of experience in commercial real estate. Local knowledge. Access to fresh data.

 

 

Client Testimonials

My company is new and growing fast. We need more space. I thought it would be easy. Look at LoopNet, check out a few locations and sign up.

I wish.

LoopNet is full of jargon and misdirection. You find listings that are no longer available. ("Oh, we just leased that. But I have another space just like it that I can show you.") Bait and switch BS.

After following leads around in circles, I was super frustrated with the process and getting closer to a space crises at the same time. I clicked Peter's site in Google. I really wish I'd done that in the beginning.

Honestly, I have been in business for my entire adult, but I'd never heard of a tenant rep, someone who specializes in helping commercial tenants like me find and lease space. It is an incredibly valuable service. Just knowing about it is worth a semester in business school.

Peter showed some great properties. He listened, came to understand my company and showed space that was relevant and possible. Each new space inspired me to look more. I got new ideas.

Finally when we decided on a great location in downtown St. Pete. I liked everything about it. But finding the right space was just the beginning.

My company is in the medical field and has many special requirements: unique electrical hookups, plumbing for oxigen tanks, and a one-of-a-kind floor plan.

I admit I was daunted by the lease and all the requirements of my company. But Peter stepped up and negotiated a great deal with my new landlord which included a generous build-out allowance.

There are not enough adjectives to describe how much Peter has done for my company. If you are looking to lease commercial space, do yourself a favor and call Peter. You will be real happy that you did.

Unbelievably, I paid nothing for his service. My new landlord took care of that.

Fred Palmer, CEO
Stemedix

I have known and worked with Peter for many years, and would not hesitate to recommend him for any real estate service.

Peter is very knowledgeable in all aspects of commercial real estate, but is particularly adept at negotiating leases and contracts.

Linwood Gilbert, MAI
President at Urban Realty Solutions

From first meeting Peter, and throughout the office suite search process to the negotiations and execution of my office lease, Peter provided excellent communication and professional service. He took the time to really understand my office space needs and was very resourceful in providing timely, valuable information and sage advice. He helped make the whole process a pleasant and friendly one.

I appreciate everything Peter did for me and I highly recommend him to anyone searching for commercial real estate consultations and services.

Jerry Albrecht
Attorney at Law

If you are looking to lease a commercial or business space Peter Fischbach is your man. We've worked with him for years and could not be more pleased. 

He is friendly, extremely well-versed in all of the services he offers, and has an unparalleled understanding of real estate in general and the idiosyncrasies of the local Tampa Bay market. 

The landlord might not be happy with the rent, amenities, and contract terms he will negotiate for you, but you and your company will.

Jake Braun
Kapok Marketing
Lead Developer
CIO

I have known Peter Fischbach for approximately 20 years both as a friend and professionally.

I have found his knowledge of Real Estate, marketing and business sense extraordinary.

He has a great knowledge of Architecture and recycling of old buildings for new uses.

I would recommend him for any professional Real Estate consultations and related services.

Peter Goldhammer, Architect
Florida #0006567

We have known and done business with Peter for some 15 years and he has acted for our group of companies in several office, commercial and industrial leases.

He is a seasoned professional, great to work with, always on on top of whats going on in the market and acting not only as a broker but ongoing advisor.

He is a great negotiator and I always feel like we got the best deal possible when we close.

Finally he is a nice guy and like ourselves I'm sure has developed hundreds of other great relationships and friendships in the business.

Carl Dilley
President
Island Capital Management, LLC.