Commercial Rental Newbie Needs Help!
October 8, 2010 7:08 PM Subscribe
I'm looking to rent a small commercial office for the first time. I've found a couple of possibilities, but I have questions about the process.
I'm needing a small (400-500SF) office in the Norfolk, VA area for my online cross stitch shop. I've found a couple of perfect possibilities online, but I've never rented commercially before and I'm unsure of what I might need to do. I'm planning to call the agents on Monday, but I'd like to have my ducks in a row before then.
Right now, I have an office and a storage unit in a Morningstar Storage building. It's month-to-month and the management is underwhelming to say the least. All I had to do to rent this place was pay first month and last month, so I'm not sure what I will need for the new place.
What should I expect to have to provide paperwork-wise? Tax returns? Credit references? Will they expect just first month and last month or more than that?
Any help the lovely Mefites could provide would be greatly appreciated.
I'm needing a small (400-500SF) office in the Norfolk, VA area for my online cross stitch shop. I've found a couple of perfect possibilities online, but I've never rented commercially before and I'm unsure of what I might need to do. I'm planning to call the agents on Monday, but I'd like to have my ducks in a row before then.
Right now, I have an office and a storage unit in a Morningstar Storage building. It's month-to-month and the management is underwhelming to say the least. All I had to do to rent this place was pay first month and last month, so I'm not sure what I will need for the new place.
What should I expect to have to provide paperwork-wise? Tax returns? Credit references? Will they expect just first month and last month or more than that?
Any help the lovely Mefites could provide would be greatly appreciated.
Best answer: If you sign a lease for a rental space for a small business, (and then if your business unfortunately folds before the lease is up), then whomever signed the paper is legally responsible for paying 100% of the rent every damn month until the end of the lease. (where I live).
posted by ovvl at 8:38 PM on October 8, 2010
posted by ovvl at 8:38 PM on October 8, 2010
Best answer: The first thing that comes to my mind is what ovvl says - some/most/all commercial leases extend over multiple years and you are responsible for paying the rent or finding someone else to take over the lease from you .
If that's the type of arrangment you are entering into you would, I think, want to consult a lawyer as the commitment being made is non-trivial on your part .
I have rented office space on a month-to-month basis and that's more like your current arrangment but I presume that's not what you have in mind from the way you phrase your question.
posted by southof40 at 4:33 AM on October 9, 2010
If that's the type of arrangment you are entering into you would, I think, want to consult a lawyer as the commitment being made is non-trivial on your part .
I have rented office space on a month-to-month basis and that's more like your current arrangment but I presume that's not what you have in mind from the way you phrase your question.
posted by southof40 at 4:33 AM on October 9, 2010
Best answer: It's really going to depend on the landlord, with a space like this. If it were 5000 square feet, they would surely ask for proof of ability to pay. Like, some serious financials. They may ask you for a certified check for two months. They may ask for your business tax returns. They may ask for guarantors, deposits, all kinds of things. Since it's a small space, they also very well might ask you for nothing at all!
And now, someone needs to say what needs to be said to all people who are unrepresented in their real estate transactions.
This is, yes, a tiny lease for a tiny space, but it can actually have big consequences for you. Standard commercial leasing terms can be very different from residential leasing. For instance, the term can be long, and the rate of escalation over the term can be astounding; you can be responsible for shares of taxes; you can be responsible for a share of repair to the building even. There can be all kinds of crazy business up in there. Please, please, please read your lease carefully, and, if possible, use its conditions to work out your month to month occupancy expense over the course of the lease (price per square foot over time), but also including utilities and any other costs, to be certain that no ballooning happens. Leases can destroy (and yes, also save!) business.
posted by RJ Reynolds at 5:18 AM on October 9, 2010
And now, someone needs to say what needs to be said to all people who are unrepresented in their real estate transactions.
This is, yes, a tiny lease for a tiny space, but it can actually have big consequences for you. Standard commercial leasing terms can be very different from residential leasing. For instance, the term can be long, and the rate of escalation over the term can be astounding; you can be responsible for shares of taxes; you can be responsible for a share of repair to the building even. There can be all kinds of crazy business up in there. Please, please, please read your lease carefully, and, if possible, use its conditions to work out your month to month occupancy expense over the course of the lease (price per square foot over time), but also including utilities and any other costs, to be certain that no ballooning happens. Leases can destroy (and yes, also save!) business.
posted by RJ Reynolds at 5:18 AM on October 9, 2010
Best answer: Standard commercial leasing terms can be very different from residential leasing. For instance, the term can be long, and the rate of escalation over the term can be astounding; you can be responsible for shares of taxes; you can be responsible for a share of repair to the building even. There can be all kinds of crazy business up in there. Please, please, please read your lease carefully
Yes, this is incredibly true and important. I rent about 2500 feet of space for my law firm, and our landlord operates on very much a handshake-type basis; very casual about signing the lease, never charges a late fee, no bullshit commons maintenance charges, no weird terms or conditions.
We looked into moving to a much fancier, upscale building and were absolutely astonished at the ridiculousness of the lease agreement. We ended up terminating our negotiations with that building over the onerous conditions the lease would have imposed on us. (Here's an example -- maybe it's common, but it really shocked me: We had to agree that, if we were in a legal dispute with the landlord, and the landlord was trying to sell the building, that we would provide a letter saying that we were not in a legal dispute with the landlord so that our legal dispute would not impede the sale of the building.) We stuck with the more downscale, but still acceptable building where the leasing agreement was much more mutually fair.
If you do NOT need upscale office space with fancy common areas, etc., there should be plenty of affordable office space where the terms are very favorable and the rent is comparatively cheap. Shop around a lot before you settle on something.
posted by jayder at 9:22 AM on October 9, 2010
Yes, this is incredibly true and important. I rent about 2500 feet of space for my law firm, and our landlord operates on very much a handshake-type basis; very casual about signing the lease, never charges a late fee, no bullshit commons maintenance charges, no weird terms or conditions.
We looked into moving to a much fancier, upscale building and were absolutely astonished at the ridiculousness of the lease agreement. We ended up terminating our negotiations with that building over the onerous conditions the lease would have imposed on us. (Here's an example -- maybe it's common, but it really shocked me: We had to agree that, if we were in a legal dispute with the landlord, and the landlord was trying to sell the building, that we would provide a letter saying that we were not in a legal dispute with the landlord so that our legal dispute would not impede the sale of the building.) We stuck with the more downscale, but still acceptable building where the leasing agreement was much more mutually fair.
If you do NOT need upscale office space with fancy common areas, etc., there should be plenty of affordable office space where the terms are very favorable and the rent is comparatively cheap. Shop around a lot before you settle on something.
posted by jayder at 9:22 AM on October 9, 2010
Response by poster: Ok all these answers are really helpful. I guess I'm really on the right track because I already knew about having to pay out the term if the business goes under. I'm not too concerned about that since we've been in business since 2002 and are growing even in this crappy economy. I'm definitely not looking at anything fancy. Both of the buildings I'm considering are older, but not crummy or anything. I just need four walls, a floor and a ceiling, so just a basic empty space. Hopefully my calls will go well on Monday. Thanks for letting me bounce these questions off of you! :)
posted by moosedogtoo at 3:00 PM on October 9, 2010
posted by moosedogtoo at 3:00 PM on October 9, 2010
Response by poster: Quick update: I signed my least three weeks ago and it was pretty much hassle free. No background check or anything like that, just two months rent as a deposit plus first month's rent. I'm pleased as punch with my new space! Thanks for the help everyone! :)
posted by moosedogtoo at 6:01 PM on November 12, 2010 [1 favorite]
posted by moosedogtoo at 6:01 PM on November 12, 2010 [1 favorite]
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posted by spilon at 8:13 PM on October 8, 2010