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View Full Version : How much to pay for a building lease ?



Grindstone1
05-05-2010, 05:13 PM
Hello Everyone,

We want to move our small business out of the home and into a building. We are trying to decide how much we can afford.

Does anyone have any advice on a way to approach this concept? Like a percentage of sales etc... We are looking for something around 1500-2500 square feet but the prices really vary. We also don't want get into a 2-3 year lease and out grow the place in 6 months. We are a consulting business for families with children that have special needs. I have approached the idea by how much business it would take to cover the cost but is there a percentage of current business that is a more sound approach?

Thank you very much! :)

Grindstone1
05-07-2010, 02:36 PM
Any ideas - anyone ????? :D

Business Attorney
05-07-2010, 08:22 PM
Leases are so different from one to the next that is impossible to generalize but I'll give you a few observations.

1. Leases for retail stores often include a percentage of sales, although typically those are in addition to some base rent. I have never seen a lease for a consulting practice that is based on a percentage of sales. I would think that is a very hard thing to convince a landlord to agree to.

2. Landlords will typically not agree to a very short term lease. It is too much of a hassle to get someone in a space for a short period, then clean it up and start showing it after a brief period. There are exceptions. Some landlords, like Regus, provide turnkey office solutions that are intended to appeal to short term tenants.

3. If you think you might grow out of the space quickly, look for an office where there is vacant space that you can take an option on, or at least is likely to be available if you do expand.

phanio
05-08-2010, 12:00 PM
I just read a great article in the latest Entreprenuer magizine regarding building space lease. There is always more to your space or laction than just the price. In this article, they even point out that some who pay $8,000 per month are more happy than those that pay $3,000 per month because those that pay less - usually get worse space and tend to be stuck with other things like maintenance.

Just as referrence, I would suggest you read that article - very good information in it.

Lyrafire
07-22-2010, 12:52 PM
Until recently, I was a real estate agent and sometimes helped commercial tenants find space, so I know something about the process. When the time comes, make sure you work with a buyer's agent who is familiar with commercial leases in your area, not a landlord's agent. You won't pay the agent; the landlord will have to pay his agent in exchange for bringing a tenant. That agent's brokerage will have to split the commission with the buyer's agent. A buyer's agent must legally represent your best interests, not the landlord's. The landlord's agent must do the same for him, which means that he will try to get the most rent for the space that he can, and on terms that favor the landlord. No matter how nice a landlord's agent is, keep in mind, anything you say will be used to the landlord's favor; on the other hand, a buyer's agent is legally required to honor your confidentiality and to negotiate on your behalf. You will want to get a buyer's agent as soon as you're ready to start looking. Don't have the landlord's agent show you property and then try to bring in a buyer's agent. If you're worried that a seller's agent will give you a better price because he doesn't have to split the commission, worry instead that he will be determined to get the highest dollar he can because that is what is in the best interest of his client. Good luck--and I hope you get the perfect location at a good price.