The commercial real estate market is much less standardized than the residential real estate market. Just being able to find what spaces are currently available is difficult in the commercial market. There are also many nuances involved like zoning restrictions that an experienced broker can help you navigate. When you also consider the fact that the landlord is normally the one that pays the broker’s commission, there is really no reason not to work with a broker.
When choosing a broker, you want to work with a tenant representation broker. In contrast to leasing agents who represent the landlord, tenant brokers specialize in showing property to potential lessees. Generally tenant rep brokers will want you to sign a Letter of Authorization (LOA), giving them the exclusive right to show you property. This will further incentivize the broker to put time into finding you the right space.
You may wonder where to find a tenant rep broker. There are many firms out there that can assist you but it is best to go with an exclusively tenant rep firm. Many of the larger firms represent both the landlord and the tenant which could become problematic for you. They may not have your best interest at heart. If you are looking for a reputable, exclusively tenant rep broker, contact me and let’s do business.
The first copy of a commercial real estate lease you receive will be completely skewed in favor of the landlord. They do this in the hopes that, like many of their other tenants, you will just sign the lease without really understanding it. However, it is important to know that commercial leases are not standardized, and many of the clauses in the lease can be negotiated so that they are fair to both the landlord and the tenant. This is why you want to hire a tenant rep broker. They will protect you and make you aware of any unfair terms. A good tenant rep broker will advise that you have your lease draft reviewed by a real estate attorney so you are completely covered.
In most cases you are going to have to sign a personal guarantee when renting commercial property if you are a start-up or small business owner. This means that if the business is not able to pay the rent then you are personally liable. This also means that your landlord will likely want to run a check on your personal finances, to make sure you have the capability to back up the lease. Landlords are simply asking you to establish a track record, so having the personal guarantee expire after a set period of time (say after 2 or 3 years on a 5 year lease) should be easy for your broker to negotiate.