by: Peter D. Morris CRX, SCLS, SCSM, SCMD
Greenstead Consulting Group
Specialists in Commercial Real Estate Training and Consulting
This is the step you have been building toward since Step 1. Pop the champagne.
Step 11 is actually opening, or ‘going live’ in the space you’ve rented.
Before you open the doors it is important to perform a final inspection of the space and bring any deficiencies to the attention of the landlord. Make sure your insurance is in place and you have your occupancy and business licenses. These little details are often missed and more than one tenant has been forced to close on opening day due to missing documentation.
If you are to receive inducement money from the landlord upon opening, now is the time to bill the landlord. Don’t forget to invite the landlord to visit your new location.
Just remember that the lease is what is called an “executory contract”. An executory contract is a contract that has not yet been fully performed or fulfilled. That is to say that it has not be fully completed or fully executed until the end of the lease term. It’s a contract in which both sides still have important performance items remaining throughout every day of the term. For example, the landlord has obligations to maintain the building throughout the term and the tenant has many obligations too, in addition to paying the rent. This fact alone can cause issues in the lease negotiation and in lease management. Errors occur over time, the people you originally dealt with may leave, economics and things beyond your control will probably change too.
As errors tend to compound over time it is important root out issues and errors as soon as possible. For example, the landlord may have an incorrect rentable area certificate on file for your space and charge you the wrong rent.
You may recall in the documentation step that we advised you to make sure the lease wording is clear. This becomes even more important if the people you originally dealt with change. The history of the negotiation will probably be lost in the process and the business relationship may change.
Since the lease is always in the process of being fulfilled and as your business evolves over time you should visit your business plan (Step 1) quickly run through all the Steps 2 to 10 again at least once a year. This will alert you to any changes you may need to make to your real estate and lease management.
These are the 11 steps in the Occupier’s leasing process. None should be skipped and glossed over for they are all inter-related and will impact your lease negotiation, the final lease you obtain, the space you will gain and — most certainly — your business.
Having read this, I can safely tell you that you now know more than most other people. This prepares you to successfully find your own space. But leasing is a complex task as varied as each person who has ever or will ever lease space for either himself or herself, or the landlord.
A truism in real estate is that one has to live with their mistakes for a very long time and big mistakes can ruin a business. The reality for most people is they don’t know what they don’t know when it comes to negotiating a commercial lease. You now have a good grounding in the leasing process that will best benefit you.