Both companies small and large will face the challenge of finding and leasing space at some point. Most executives understand that their company's facility can have a direct impact on everything from employee retention and productivity to the company's ability to grow.
While a typical landlord may be involved in dozens of lease negotiations a year, a tenant generally only leases space once every few years. A broker can provide the resources, market knowledge, and experience that is required to find the right space, get a good deal, and to avoid costly mistakes.
Some of the most common mistakes a tenant can make are:
- Not using a real estate broker
- Working directly with the landlord or building agent
- Waiting too long to start the lease process
- Not thinking about the future
- Not verifying building systems and infrastructure
- Not retaining legal counsel
1) NOT USING A REAL ESTATE BROKER
One of the biggest mistakes a tenant can make is to not use a real estate broker to handle their lease transaction. A commercial real estate broker can provide the knowledge and leverage necessary to get a competitive deal all the while navigating you through the leasing process. Additionally, Tenant's should continue to keep their real estate brokers involved whenever they are considering expanding, renewing, or extending their lease.
2) WORKING DIRECTLY WITH THE LANDLORD OR BUILDING AGENT
Landlord's and their agents are looking out for their best interests. As a result, you will almost always get a better deal when you are represented by your own real estate broker.
In fact, we are quite often brought into negotiations after tenants have called on a leasing sign and the landlord's agent has told the prospective tenant the rental rate and made it clear that the rate is non-negotiable. Once we are introduced into the picture, we are often able to negotiate a lease rate that is effectively 10-20% less.
3) WAITING TOO LONG TO START THE LEASE PROCESS
Time and time again we see tenants waiting too long before they start looking for space. When a tenant waits too long before beginning the lease process, there is a higher likelihood that they will pay more, receive less favorable lease terms, and endure more difficulty and disruption when moving.
We recommend that clients allow themselves no less than the amount of time as follows:
| Space Size in SF |
Time Table |
| 1,000 - 5,000 |
2-6 Months |
| 5,001 - 10,000 |
4-9 Months |
| 10,001 - 20,000 |
8-12 Months |
| 20,001 - 50,000 |
12-15 Months |
| 50,001 - 100,000 |
15-24 Months |
| 100,001 + |
24-36 Months |
4) NOT THINKING ABOUT THE FUTURE
Companies grow, downsize, and relocate, and unfortunately these events don't always coincide with your leases. It is therefore important to consider these factors when thinking about leasing and negotiating in ways which help facilitate growth or contraction. This is particularly significant in Silicon Valley where companies often grow very rapidly. Therefore, negotiating rights to sublease, rights to expand, rights to cancel, and options to extend are instrumental in planning for future growth.
5) NOT VERIFYING BUILDING SYSTEMS AND INFRASTRUCTURE
In today's business environment, a company's livelihood can rest upon the building's data, power, networking, and HVAC infrastructure. Tenants should ensure that buildings they intend on occupying are capable of providing the network connectivity and other building systems necessary for a tenant's operation.
6) NOT RETAINING LEGAL COUNSEL
Failing to hire an attorney knowledgeable in commercial real estate is a mistake tenants often make. An attorney can help protect you from costly mistakes and errors in the documents, errors in the figures, and other problems that could lead to litigation or expensive legal action.
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