lease biz bldg
DESCRIPTION
"How to Lease a Business Building" shows small business owners how they can successfully rent a commercial building for their business.TRANSCRIPT
Welcome! How to Lease a Business Building
www.BECSanDiego.com
www.SanDiegoSmallBiz.com
Presenter: Regina P. Brown
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
Page 1
Overview
• Plan your needs
• Locate, Select, and Evaluate Bldg.
• Contract and LOI
• Budget and Costs
• Moving In
• Term. Lease
• Forms and Resources
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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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 Copyright © 2011 R.P. Brown
Page 3
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 Choices
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
Page 4
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 Copyright © 2011 R.P. Brown
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Hire a Broker &
Locate Bldg.
• Broker Benefits
• Searching for Buildings Online
• Checklist of Needs
• Research
– Traffic count
– Demographics
– Zoning/Uses
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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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, C
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
Page 7
“Due Diligence” (Research)
• Sign regulations
• Government permits
• Property profile-Mortgage/
Taxes/Liens
• Talk to other tenants
• Contractor/Designers/Architect
• Franchise requirements
• Delivery Access
• Insurance 9-Jun-11 Leasing a Business Building
Copyright © 2011 R.P. Brown
Page 8
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 9-Jun-11 Leasing a Business Building
Copyright © 2011 R.P. Brown
Page 9
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 check
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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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
Inventory
9-Jun-11 Leasing a Business Building
Copyright © 2011 R.P. Brown
Page 11
Calculate Total Rent (does not include NNN fees)
Year # Rate per
sq. ft.
Usable
Sq. Ft.
Monthly
Rate
Months Annual
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 Copyright © 2011 R.P. Brown
Page 12
Plan for Success!
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
Page 13
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 116
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
Page 14
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 Copyright © 2011 R.P. Brown
Page 15
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 Copyright © 2011 R.P. Brown
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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 Copyright © 2011 R.P. Brown
Page 17
Questions?
???
Email me:
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
Page 18
Regina P. Brown, Broker
(760) 804-9275
www.CalCoastCountry.com
www.BrownBiz.net
www.RealtyProAcademy.com
THANK YOU!
9-Jun-11 Leasing a Business Building Copyright © 2011 R.P. Brown
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