L. Preparing Your Rental Priorities Worksheet

WHAT KIND OF SPACE DO YOU NEED?



space didn’t pan out as hoped, or their

income is insufficient to cover the rent. As

long as the tenant’s own lease allows it,

subleasing is one way to cut the overhead.

There are, however, downsides to being

a subtenant. For one, since you’re leasing

from a tenant, you’re dealing with someone

who is not in the business of being a landlord and may not know or care about treating a tenant—you—properly and legally.

For instance, you may not find your “landlord” reacting as promptly and conscientiously as you might wish when it comes to

requests for repairs.

If you are considering renting from

another tenant, keep these issues in mind:

• Check to see if the landlord’s consent

is needed for subletting the space or

assigning the lease. If it is, make sure

you’re not legally bound to take the

space until the tenant’s landlord has

consented in writing.

• Look for clauses in the prime lease

(the lease between the landlord and

the original tenant) that require the

landlord’s consent for a use change or

alterations of the space. (Use restrictions are explained in Chapter 7,

Section D.) Don’t sign up unless the

landlord gives the needed approvals,

in writing.

• Scrutinize the tenant’s lease for

charges in addition to rent—passthrough charges, for example, for

maintenance, taxes, and insurance.

Find out if the tenant will be passing

on these costs to you. (Chapter 9, Sec-



1/ 2 7



tion D, explains these additional

forms of rent.)

• Get written confirmation from the

landlord and tenant that the tenant’s

lease is in good standing, and that as

long as you pay your rent and other

required charges, you can continue to

occupy your space.

• Include a clause in your lease allowing you to cancel the sublease if the

landlord fails to provide building

services and repairs. The last thing

you want is to be the unhappy recipient of the fallout from a fractious relationship between the landlord and the

tenant.



Checklist for Determining

Your Space Needs

This chapter will get your space search off

to a great start. It should help you:

• determine that you really need to

move

• know the maximum rent and deposit

you can afford to pay

• identify the ideal location, size, physical features, and services of the property you want

• decide how long a lease you need,

and

• prepare a Rental Priorities Worksheet,

including features of the rental or

lease that you can’t abide (absolute

no-ways).



■



Chapter 2

Looking for Space and Using Brokers



A. How to Find Space on Your Own ......................................................................... 2/3

1. Enlist the Help of Personal Contacts ................................................................ 2/4

2. Do Your Own Space Scouting .......................................................................... 2/4

3. Contact Landlords and Management Companies Directly ............................... 2/5

4. Check Classified Ads: On Paper and Online .................................................... 2/5

5. Read Trade Publications .................................................................................. 2/6

B. Working With a Real Estate Broker ...................................................................... 2/7

1. Who Can Be a Broker? .................................................................................... 2/7

2. Brokers Who Work for Landlords ..................................................................... 2/9

3. Brokers Who Work Exclusively for Tenants ...................................................... 2/9

4. Brokers Who Work for Landlords and Tenants ............................................... 2/10

5. Brokers Who Are Dual Agents ....................................................................... 2/10

C. The Value of Hiring Your Own Broker ................................................................ 2/12

D. How to Find a Real Estate Broker ....................................................................... 2/13

E. How to Choose a Broker .................................................................................... 2/14

1. Questions to Ask People Who Recommend a Particular Broker ..................... 2/14

2. Questions to Ask the Broker .......................................................................... 2/15

F. Signing a Contract With Your Broker .................................................................. 2/16

1. Paying Your Broker ......................................................................................... 2/17

2. Exclusive and Nonexclusive Arrangements .................................................... 2/18

3. Avoiding Conflicts of Interest With Your Broker ............................................. 2/19



2/2



NEGOTIATE THE BEST LEASE FOR YOUR BUSINESS



4. Clarify the Details in Writing ......................................................................... 2/21

5. Provide for Searching Without the Broker ...................................................... 2/21

G. Handling Problems With Your Broker ................................................................ 2/21

1. Signs of Trouble ............................................................................................. 2/22

2. Resolving Problems ....................................................................................... 2/22

3. Firing Your Broker .......................................................................................... 2/23



LOOKING FOR SPACE AND USING BROKERS



Read This Chapter If …

This chapter is for readers who haven’t

found space or will be working with brokers. It’s especially useful in the following

situations:

• You’ve decided to hunt on your own

and would like some advice on fruitful

methods.

• You expect to deal with a landlord’s

broker, and you want to know what

that experience will be like.

• You’ve decided to hire your own broker and want to learn the process and

the pitfalls (it’s trickier than you think).

• You and the landlord are sharing a

broker (and you want to learn how to

protect yourself).

You can skip this chapter if

you’ve already found space

and are ready to negotiate, or if neither you nor the landlord is using a

broker.



I



f you’ve thought carefully about the

kind of location and building that will

best suit your business, determined the

maximum rent you’re willing to pay, and

set other priorities, you’ve accomplished

quite a lot already. (Chapter 1 guides you

through this process.) Now it’s time to take

your specifications—in the form of your

Rental Priorities Worksheet—and check out

potential spaces. You can proceed in a



2/ 3



number of different ways, depending on

your familiarity with the area, the amount

of time you wish to invest in the search,

and your contacts with other business

people who may be able to steer you towards appropriate property.

Perhaps you’ll conduct your search on your

own, reading classified ads in newspapers

or online, looking for signs or placards in

building windows, and soliciting leads from

friends and business associates. Or maybe

you’ll opt for the assistance of a real estate

broker. Either way, there are proven steps

that will make your search easier. This

chapter shows you how to most effectively

and efficiently find potential rental space,

and explains the various ways you may wish

to involve a broker in your search. Chapter

3 goes into detail on how to visit and

evaluate prospective spaces and landlords.



A. How to Find Space on

Your Own

If the rental market in your area is awash

with vacancies, chances are the landlords

for those properties have advertised in many

places, hoping to reach a wide audience.

You won’t have much trouble finding out

what’s available. But if the rental market is

tight, landlords can afford to hustle less,

knowing that many eager tenants will seek

them out. If there are few vacancies for the

type of space you need, you’ll have to do

extra work to find them.



2/4



NEGOTIATE THE BEST LEASE FOR YOUR BUSINESS



1. Enlist the Help of

Personal Contacts

Because some of the best opportunities

come via word of mouth, ask friends and

other business contacts if they know of

available space. Explain your rental space

priorities either by phone, in person, or by

sending a note. (You can even attach your

Rental Priorities Worksheet if you wish.)

Start with business owners—particularly

those renting space in the part of town that

interests you. They may know of enterprises

that are moving or folding long before the

vacancies are listed in newspaper ads.

There are advantages to being at the

head of the pack. Landlords hate to

have periods of vacancy, during which they

have no rental income. In exchange for your

readiness to commit to a rental before it becomes vacant, a landlord might be willing to

cut you a better deal on improvements or rent.



Your business advisors—lawyer, accountant, and insurance broker—may also have

good leads on space that’s about to become

available. And if you attend meetings of

your chamber of commerce, community

service group, or trade organization, spread

the word that you’re looking for space. It

pays to be imaginative. One tenant we know

called the area’s largest commercial janitorial

service, which told him of a couple of

businesses that had recently canceled their

service contracts in preparation for a move.



2. Do Your Own Space Scouting

The decidedly low-tech method of pounding

the pavement still works. Go to the neighborhoods where you might locate and spend

some time driving or walking the streets to

see what’s available. You may see signs in

windows or on buildings advertising space

that you won’t learn of any other way. Some

landlords prefer to market their vacancies

that way, figuring they can save on advertising costs and broker’s commissions.

As you cruise the streets and sidewalks,

don’t just look for vacant space. A store,

studio, office suite, or workshop that’s

perfect for your business may be occupied

by a tenant who is going out of business or

moving to another location soon. Take a

peek inside building lobbies to see who

rents there. If you find a desirable location,

ask people in the building if they know of

any space opening up soon. You may learn

of someone who is about to move on.

There’s a lot of turnover among small businesses, and you may get lucky.

Exploring a neighborhood at a leisurely

pace also gives you the opportunity to

closely observe traffic patterns for both

vehicles and pedestrians. For example, if

your business relies on customers arriving

by car, you’ll want to see how difficult it is

to find parking—important information to

know before you get too far into lease

negotiations. Be sure to do your investigating

during normal business hours.