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"How to Lease a Business Building" shows small business owners how they can successfully rent a commercial building for their business.

"How to Lease a Business Building" shows small business owners how they can successfully rent a commercial building for their business.

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Lease biz bldg Lease biz bldg Presentation Transcript

  • Welcome! How to Lease a Business Building www.BECSanDiego.com www.SanDiegoSmallBiz.com Presenter: Regina P. Brown9-Jun-11 Leasing a Business Building Page 1 Copyright © 2011 R.P. Brown
  • Overview• Plan your needs• Locate, Select, and Evaluate Bldg.• Contract and LOI• Budget and Costs• Moving In• Term. Lease• Forms and Resources9-Jun-11 Leasing a Business Building Page 2 Copyright © 2011 R.P. Brown
  • About Me • Real Estate Broker’s license nearly 20 years • Service all of California • Residential, Commercial, & Property Management • Entrepreneur who loves to help other professionals & small business owners • Love the SBDC!!!9-Jun-11 Leasing a Business Building Page 3 Copyright © 2011 R.P. Brown
  • Some Major Issues: 1. Commercial vs. Residential 2. Complexity 3. Goodwill 4. Types of Landlords/Owners 5. Biggest Challenge for Small Businesses 6. Explore low-cost Choices9-Jun-11 Leasing a Business Building Page 4 Copyright © 2011 R.P. Brown
  • Your Needs Checklist: Type/Use  Retail  Commercial/Industrial/Warehouse  Restaurant  Office  Medical Square Footage Budget Location/Signage/Parking/Accessiblity Customers/Employes (demographic)9-Jun-11 Leasing a Business Building Page 5 Copyright © 2011 R.P. Brown
  • Hire a Broker & Locate Bldg.• Broker Benefits• Searching for Buildings Online• Checklist of Needs• Research – Traffic count – Demographics – Zoning/Uses9-Jun-11 Leasing a Business Building Page 6 Copyright © 2011 R.P. Brown
  • Select & Evaluate Bldg.• Condition• Security• Amenities• Noise• Floor plan/Build out/Future expansion• ADA compliance/Accessibilty (roads)• Hours of Operation• Allocation of Space• Class A, B, C9-Jun-11 Leasing a Business Building Page 7 Copyright © 2011 R.P. Brown
  • “Due Diligence” (Research) • Sign regulations • Government permits • Property profile-Mortgage/ Taxes/Liens • Talk to other tenants • Contractor/Designers/Architect • Franchise requirements • Delivery Access • Insurance9-Jun-11 Leasing a Business Building Page 8 Copyright © 2011 R.P. Brown
  • Contract / Letter of Intent (LOI) • Types of Leases • Clauses – Rent, increases (escalations), NNN, Deposit – Personal guarantee – Exit clause / termination • Incentives (abatement) • Square Footage (usable space) • Begin & end dates/renewability • TI (tenant improvements) • Signage/Parking/Amenities/ Advertising • Commissions a Business Building9-Jun-11 Leasing Page 9 Copyright © 2011 R.P. Brown
  • Qualifying Criteria for Contract • Complete Application – ID – Business License – Credit Report/ D&B • POF (bank statement) • Corp. Minutes • Franchise Approval • Other: co-signer/collateral/reference check9-Jun-11 Leasing a Business Building Page 10 Copyright © 2011 R.P. Brown
  • Budget/Costs  Broker (usually paid by Landlord)  Attorney  TI (tenant improvements) = build out • Architect • Designer • Contractor  Signs  Permits  Deposit + 1st Months Rent  Furniture and Fixtures  Equipment  Inventory9-Jun-11 Leasing a Business Building Page 11 Copyright © 2011 R.P. Brown
  • Calculate Total Rent (does not include NNN fees) Year # Rate per Usable Monthly Months Annual sq. ft. Sq. Ft. Rate Rent 1 $2.25 2,500 $5,625 7 $39,375 2 $2.32 2,500 $5,794 12 $69,525 3 $2.39 2,500 $5,968 12 $71,611 4 $2.46 2,500 $6,147 12 $73,759 5 $2.53 2,500 $6,331 12 $75,972 6 $2.61 2,500 $6,521 5 $32,605 6 Free 2,500 $0 6 $0• Terms: 5 year lease + 6 mo. free = 66 months occupancy• Base rent: $2.25 / sq. ft. + 3% annual increases, compounded• Total consideration $362,847 ÷ 66 mo. = $5,498/mo. ÷ 2,500 sq. ft. = $2.20 sq. ft. (Effective Rate) 9-Jun-11 Leasing a Business Building Page 12 Copyright © 2011 R.P. Brown
  • Plan for Success!9-Jun-11 Leasing a Business Building Page 13 Copyright © 2011 R.P. Brown
  • Timeline• Select Broker Day 1• Receive Property Search Day 1-3• Tour the Market Day 5-10• Secondary Tour (if necessary) Day 10-15• Submit Proposal(s) Day 17• Counter Proposal(s) Day 22• Lease Draft(s) Day 25• Lease Execution Day 35• Tenant Improvements/Build Out Day 55-115• Move In/Lease Commencement Day 1169-Jun-11 Leasing a Business Building Page 14 Copyright © 2011 R.P. Brown
  • Moving In • Permits – Health department – Weights and measures – City business license – Sign permits • Signs • TI (tenant Improvements) • Resale License (CA Board of Equalization) • COO (Certificate of Occupancy) if new bldg.9-Jun-11 Leasing a Business Building Page 15 Copyright © 2011 R.P. Brown
  • Termination/Moving Out• Last Month’s Rent• Security Deposit• Clean-up• Check out• Disposal of equipment, furniture, fixtures, etc.9-Jun-11 Leasing a Business Building Page 16 Copyright © 2011 R.P. Brown
  • Resources: • Sample Forms: – Application – LOI – Commercial Lease(s) – Property Profile – Plat Map – Zoning Map – Use Codes – Floor Plan – City Sign Regulations – City Sign Application • Book: – Negotiate the Best Lease for your Business • (found on NOLO.com)9-Jun-11 Leasing a Business Building Page 17 Copyright © 2011 R.P. Brown
  • Questions? ??? Email me: Regina@BrownBiz.net9-Jun-11 Leasing a Business Building Page 18 Copyright © 2011 R.P. Brown
  • THANK YOU! Regina P. Brown, Broker (760) 804-9275 RPBrown@Realtor.com www.CalCoastCountry.com www.BrownBiz.net www.RealtyProAcademy.com9-Jun-11 Leasing a Business Building Page 19 Copyright © 2011 R.P. Brown