The most important part of finding commercial space is to have a plan or strategy get the best results. I like the 20:6:3:1 rule (http://blogs.wsj.com/wealth-manager/2010/03/25/go-ahead-hate-me-ill-still-help-you-make-money/) used by a wealth manager that writes for the Wall Street Journal. The strategy takes you from a full market search to selecting the best option for the tenant. The numbers in the name of the strategy are only a guide line and will differ from market to market and deal to deal. The basic principle is that it will take 20 buildings to find 1 space for your company. The bigger or smaller the market will determine the amount buildings needed to get the best results.
20:6:3:1 Rule
1. Contact 20 buildings in the market you wish to lease space.
2. About 6 of the buildings will have space that fit your space requirements.
3. About 3 of the 6 six buildings will fit your other criteria such as space layout, rental rate, location, etc.
4. One will be the winner.
How To Apply The 20:6:3:1 Rule In Leasing Commercial Space
20
The first step is the most important and the most time consuming because it involves gathering the most data to make a qualified decision. Search your market of say 20 buildings and gather the contact names and e-mail addresses of each building. You can gather the information by driving by each building, subscribing to a third party (most charge $) or using http://www.leasewithease.net (free to tenants). Contact those 20 buildings to find out if they have space available that fits your square footage requirements. Rental rate and other criteria will be used to ultimately select your space but at this time you want a market survey driven by your required square footage. The square footage should be a range of how much square footage you need. One space might be more or less efficient than the next space. For example, if you are looking for 8,500 square feet make your space requirement 7,000 to 10,000 square feet.
http://www.leasewithease.net allows tenants to contact landlords for office & retail space in the Dallas market. Coming soon LeaseWithEase will offer landlord contacts for office tenants in the Austin & Oklahoma City markets. The website is free to all tenants and tenants may remain anonymous during their initial search.
6
Of the 20 buildings you will find 6 buildings with available space that fits your square footage requirements. At this point you will want a verbal or written offer for each of the six buildings. Request a letter of intent or proposal from each of the buildings. This will be the basic economics and legal terms of the deal. You now have a real-time market survey specific to your needs. The real-time data gives you a better idea of the market rental rates, TI allowances, etc. You should use this real-time data to negotiate between the 6 buildings. Also, start creating leverage with building landlords by letting them know you are requesting the same information from several other buildings in the market.
http://www.leasewithease.net website allows landlords to make initial offers to tenants based on rental rate and operating expenses via our website. All landlord responses are gathered in one central Response Room only visible to the tenant.
3
Of the 6 buildings only 3 buildings will fit a majority of your criteria such as layout of space, rental rate, location, length of term, etc. You would like to keep your options open to as many buildings as possible but a tenant will need to narrow down their choice as much as possible. There are two options that a tenant can use for negotiating with the 3 buildings. First option is to go back to the buildings and let the buildings know that you are requesting a final and best offer from the top buildings. Second option which landlords usually prefer is to go back with a counter offer for each of the 3 buildings. The buildings will most likely make a counter offer to your counter offer so make it aggressive enough to have some meat taken off but not over the top that the landlord won’t respond. Use your real-time data to determine which deal points are negotiable.
http://www.leasewithease.net provides a financial analysis tool that let’s you compare the economics of two leases side by side at http://www.leasewithease.net or compare up to 20 leases through an excel file built only for LeaseWithEase users. And yes the financial analysis is still free to users.
1
Only 1 building of the three buildings will become the winner of your business. This is sometimes an easy choice and sometimes it is a difficult choice. Use our financial analysis tool to see the financial impact of each lease proposal. Once you commit to a building then it is advised to hire an attorney to assist you with the lease agreement.
http://www.leasewithease.net provides free consulting to our users and we only consult the tenant in negotiating a lease. We offer free advise to tenants whether they use our site or not. We offer free advise during lease negotiations or just leasing questions in general.
Tenants that are looking to lease commercial space can do so on their own or by hiring a broker. For those that choose to find and negotiate their own lease the website http://www.leasewithease.net is built for you.
Real-time data is better than a market survey based “Asking Rents”. “Asking Rents” are meant to be negotiated down to actual rents. Get the real data to negotiate the right deal for your company.
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