Many entrepreneurs are in unfamiliar territory when looking for their office or retail space. We have outlined below some FAQ’s that will help you define your needs and help you understand the landlord’s requirements.
How does a broker help me?
The broker represents you and your interests to the landlord, giving you a stronger negotiating position than searching on your own. The broker will ask you questions about the nature of your business and how it operates. The broker will also help you define how much space you may need, will put together a list of properties that fit with those needs, arrange site visits, negotiates the business terms and may even assist in overseeing the build-out details.
What does the broker need to know about my business in order to help me?
As stated above, the broker will “interview” you as to your business operation, your budget, how many people you need to accommodate, preferred location(s), projected growth, length of the lease term, when you need to move into the new space, parking/transportation requirements, etc. It is critical to share the details about how your business operates, the workspace culture and your budget so that the broker can target the right space for your particular business. Does your business have a distinctly formal or casual culture, or something in-between?
What does it cost to hire a broker?
Generally, the broker is paid by the landlord, so there is no cost to the tenant. NOTE: the broker will typically ask you to sign an EXCLUSIVITY AGREEMENT. This simply outlines the fact that you will be working exclusively through this broker to find your space. The agreement is generally for 6 to 12 months. It is a tool for the broker to ensure that you are not working with other agents and that if you close on a lease, they will be compensated for the time they dedicate to your entire transaction.
What will a landlord need to know about my business?
There are many things that the landlord will require when you get to making an offer on a space so it is best to have this information prepared prior to initiating your space search. The list may include any or all of the following:
- A copy of your business plan
- Three years of financial history of the business, or personal tax returns
- Financial Statements: Assets, Liabilities, Net Worth/Profit
- Any business references, or client testimonials
- List of investors or Board of Directors
- Letter of Credit from a Financial Institution
What other professionals help in the transaction?
The broker will handle the negotiation of the business terms. You will also want to have a CPA to review the financial terms of the deal based on your operating budget, and an Attorney (preferably one that handles contract law or real estate law) to review the legal terms of the lease agreement. These three resources will be invaluable in assisting you to make the best decision for your business location.