Your Future Landlords 5 Questions about You (The Landlords View)
- What is the credit of the company I am signing a lease with?
Most landlords have loans in place and at times a lender will ask to approve a lease before it is signed as they technically are part owners. If a landlord wants to refinance a building, a large part of the valuation of the building will depend on the buildings rental stream and likelihood of this rental stream continuing (ie your financial picture and credit history). Some landlords will not be comfortable leasing spaces to start up companies because of this credit risk. - How much do I have to spend to get them to start paying rent?
The issue here is concessions that a landlord gives to a tenant. These included custom tenant improvement build outs, free rent, and commissions paid to brokers involved in the transaction. The more a landlord must pay to start your rental stream, the more scrutiny they will use in analyzing your company as a potential tenant. - What security do I have if this company defaults?
Most likely the security that a landlord has the most access to is your security deposit. Theoretically they can get in the line and be one of the debtors attempting to collect some of your business during its liquidation, but this time investment is rarely made by a landlord. If you are unlucky enough to personally guarantee the lease, the landlord might pursue you personally to cover the remaining lease obligation or at least the marketing time and cost for procuring a new tenant. - How long do I have to wait for another tenant to come along?
During the negotiation process or when you are potentially behind on your rent, the landlord will consider this argument. If the market is doing well and there is lots of demand for space, your ability to negotiate will be decreased because the landlord will have a rough idea of how long it will take to find a higher quality tenant. If the market is weak (like right now), the tenant will have a lot more leeway to negotiate and can use this argument as part of the negotiation process. - What is their use and how will that affect the building?
If a company is cramming 15 people into 1,000 square feet, these people are having an adverse effect on the buildings systems and building community. For example, a school that leases space will have a few hundred students using the lobby, parking lots, and bathrooms when a normal office user might have 30 full time users affecting the building. A landlord will think carefully about your use, your clientele, the type of consumer who comes to visit and how that will affect other tenants in the building and the buildings value.