So you’ve found a great commercial space. What's next?

Last updated:
Sep 20, 2023
Commercial Real Estate

You've done the legwork, scoured listings, and finally found a commercial property that feels just right. It’s an exciting moment, but the journey to securing the space is far from over.

From negotiations to making good on your existing premises and all the details in between, let's dive into what comes next to ensure the transition is smooth and successful.

Make sure the space will actually work for you

If you're eyeing a new commercial office space, it’s best to engage a fit-out company to help take your vision and practical needs and turn them into a real plan. Get them to draft and price a design to better understand whether it aligns with the way you work, your timing and your budget. 

Tenant Tip: It’s best practice to get at least three quotes from different contractors to compare prices and services offered.

Engage a lawyer 

Even if you're working with a tenant rep, engaging a lawyer to review your final lease terms will help protect your interests and reduce the risk of legal pitfalls. 

Tenant Tip: Have both your TR and lawyer meticulously review your lease terms, incentive deed and other official documents. Your TR understands your business needs and market dynamics, while your lawyer ensures legal compliance and protection. 

Sign a HoA

A Heads of Agreement (aka HoA) is an initial non-binding document that establishes the key terms and conditions of a commercial lease before the formal contract is drawn up. It can be renegotiated or reneged and provides clarity on:

  • Rent
  • Lease duration
  • Responsibilities
  • Other negotiation points

This type of agreement acts as a preliminary roadmap ensuring both parties are on the same page from the outset, which minimises misunderstandings and disputes and expedites the lease negotiation process.

Psst. you can brush up on other common commercial real estate terms here.

blurred image of office to signify what to do before signing a lease

Pay a deposit 

At HoA stage, the landlord or agent may ask you to pay a deposit (usually equivalent to one month’s rent) in order to secure the space.

Once you’ve signed the lease, it’s common for the landlord to put this deposit towards the first month’s rent. However, you should be clear about what happens to this deposit if one party were to pull out of negotiations. 

Prep your bank guarantee and insurances

A bank guarantee is a form of security that a bank provides to assure one party (typically the landlord) that another party (usually the tenant) will meet their lease-related obligations.

Similar to how a bond works with residential properties, it usually amounts to 3-12 months’ rent and is designed to protect the landlord from any damages, unpaid rent, or other breaches of the lease agreement. 

There are a few steps to take when it comes to bank guarantees:

  1. Confirm the bank guarantee amount with your agent or tenant rep. They should provide you with a one-page document with the requirements
  2. Head off to the bank to get a draft bank guarantee
  3. Send the draft to your tenant rep/agent for confirmation
  4. If all looks good, you can ask the bank for the original to be issued 

The insurances you’ll need should be outlined in your HoA or lease. Speak with your current insurance provider to understand the process of changing your registered address and how to meet the requirements of your lease. 

Round up building contacts

Get your hands on your new property manager’s contact details ASAP so you know who to contact to address immediate concerns, report maintenance issues, and to resolve any problems that may arise during your tenancy.

These days, it’s rare that a building is not managed by a Property Manager. However, if you find yourself in this situation, source the landlord and agent’s details instead.

Plan for your IT move 

Speak with the property manager (you should have their details now) to ensure that the space can accommodate your IT requirements - think power, data connectivity, and physical space for servers or equipment. They’ll be able to provide insights into any existing IT infrastructure and any limitations within the building that may impact your plans, cause delays or distrupt operations.

Get your team excited about the move 

An enthusiastic team is more likely to embrace change and adapt quickly to a new work environment. So, get your team excited about your upcoming office move by:

  • Communicating - Communicate the reasons for the move, its benefits, and its alignment with the company’s objectives. Involve employees in the decision-making process by seeking their input (where it makes sense) and addressing any concerns.
  • Giving them a sense of ownership - by allowing them a degree of customisation in the new office. 
  • Team building - Organise team-building activities that are centred around the new office to create a fun and friendly atmosphere.
  • Providing support and resources - Include information about transport, local amenities, and new building technology to help your employees adjust to their new location.

Prepare to make good your existing space 

If you have a makegood in place, get at least three quotes from reputable fit-out contractors to understand costs and timeline. 

You don’t want to leave yourself without time on your side, so start the process at least 2-3 months before your lease expiry (leave more time for larger spaces).

Remember, tenancies with an existing fit-out can often be far more financially attractive to an incoming tenant. So, if yours is in good condition, there’s potential to negotiate a payout that’s cheaper than the actual make good amount (psssst… tenants should expect to pay $400-$600 per sqm in Sydney).

Plan what to take/leave from the current office 

Create two lists: one for items you need to dispose of and another for items that will be coming with you. Cross-check these lists with the layout of your new office to ensure you haven't missed any essentials.

Partner with Tenant CS

At Tenant CS, we specialise in helping commercial tenants find the perfect space, secure savings and negotiate tenant-centric lease terms. Our team understands the intricacies of commercial real estate, negotiations, and the unique needs of businesses like yours.

From finding the perfect space to negotiating a deal that suits your business, we'll help you make informed decisions, secure favourable terms, and save you time and money along the way. 

Book a call with our team to see how we can help you.

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