Are you having a hard time finding the right space to lease for your business? You’re not alone. This is a common occurrence in Bend with vacancy rates ranging from 1.5% to 4% depending on the property type. Space is scarce before you apply a tenant’s specific search parameters such as size, price, location and configuration. Once these parameters are employed, the number of properties that meet the criteria can frequently be counted on one hand. With many tenants having last signed a lease coming out of the recession, this presents a major market shift and requires a resetting of expectations. Below are a few tips to keep in mind if you’re in the market for a new space to lease.
Start your search earlyIt’s important to give yourself enough time to find your new space. If you have an existing business and you know you need to relocate, start looking nine to 12 months before your lease expiration date. This allows an appropriate amount of time to assess the market with your broker, understand what types of spaces are available and determine if the type of space you need is going to be difficult to find. If you need to make modifications to space and building permits are required, you will need a sufficient amount of time to complete the improvements before space can be occupied. The exact time frame can be measured in months and is dependent on a number of variables including the extent of the improvements and how quickly you submit for and receive building permits. Work with your broker on the front end to formulate a realistic timeline. Too often, businesses start their search for new space two to three months before their lease expiration date. This is not enough time and could put your company in a difficult situation.
Compromise is keyWith so few spaces available, finding a space that checks every box is going to be difficult and may require patience. Gauge the difficulty of your search parameters or wish list on the front end so you’re not disappointed later on. If you find the perfect space, move quickly so you don’t miss out. If you’ve been searching for a while and can’t find the perfect space, some level of compromise may be required depending on your timeline. Separate your wish list into “must-have” and “nice to have” and focus your search on the “must-haves.”
You can always make modifications before you move in, but this requires the appropriate amount of time as mentioned above. Making modifications at a later point in time is also a possibility, but this could be a disruption to your business.
Be ready when you find the right space
Spaces can lease very quickly once they hit the market. To be successful in securing a new location for your business, you need to have your ducks in a row and be ready to make an offer when the right space presents itself. Besides the actual letter of intent, which is a formal proposal outlining all of the major deal points, landlords are going to ask for additional documentation to better understand the company submitting the proposal. These documents may include credit reports, profit and loss statements, balance sheets, personal net worth statements and tax returns. If it’s a startup business, a business plan with financial projections will almost certainly be required. Have these documents ready to go and submit them up front with your letter of intent. This allows a landlord to clearly understand the creditworthiness and financial strength of the tenant submitting the offer and may give you a leg up if it’s a competitive situation.
Understand that it’s a landlord’s market
Gone are the days of significant landlord concessions such as free rent and substantial lease rate flexibility. Landlords have most of the negotiating power and are more selective than ever when it comes to selecting tenants. Most landlords are pushing for three- to five-year lease terms or longer depending on the property. If you’re pursuing a type and/or size of space that’s in high demand, there’s probably very little room for negotiation. Submitting a letter of intent that’s too aggressive may result in significant pushback or no response at all. Have realistic expectations and work with your broker to submit a letter of intent that best positions your business for a favorable response.