As a startup, leasing your first commercial space can be a daunting task. It’s a decision that can affect your business for years to come. You want to make sure you’re aware of all of the options in order to make the best choice when it’s time to move out of an incubator or co-working space. Below are 4 key topics to consider when that time comes.
- Length of Term: Most landlords in today’s real estate market want at least a 3 year term. This can sound like forever to a startup, and is just one reason that co-working space has become so popular. However, finding a shorter term (1 to 2 years) is possible, but difficult. Another option is finding a sublease, which sometimes will have a shorter term and could include furniture.
- Lease rate and free rent: What you pay for rent is determined on a square footage basis. It is always negotiable, as is free rent (usually offered in the beginning of the lease). As a startup, you may be required to sign a Personal Guaranty on the lease.
- Location: Depending on your type of business, location can be extremely important in recruiting the people you want working with you. Midtown (specifically buildings close to Georgia Tech) has become extremely desirable to many technology-based startups. Location vs. price is always an important decision. However, we’re witnessing the Beltline continue to create opportunities in areas that otherwise you may not consider.
- Your Broker: When you have a real estate broker represent you (tenant representation), his or her service costs you NOTHING. Commission has been built into the lease rate, and if you don’t use a broker, the landlord’s broker gets to keep all of it instead of splitting it with your broker. As Jackie Hutter discussed in her recent piece regarding law firms, as a startup you likely will not be very important to a larger real estate firm. Working with a small, entrepreneurial firm usually means you’ll receive more attention and work with someone that is like-minded. It could be the difference in finding space and finding the RIGHT space for your startup.
Chris Braswell provides real estate expertise to tenants and owners of office and industrial buildings in Atlanta. He has a special interest in working with startups – understanding their culture and need for flexibility. In addition, he helped startup client Audio Activ with business development and operations for 7 months in 2014.