Stop Saying This To Prospective Landlords!

Stop Saying This To Prospective Landlords!

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We receive a lot of prospective tenant phone calls.  Most prospects ask the same basic question (“How much is the rent?!”).  Before we are able to quote a rate for an office space or a warehouse space, we have to ask a series of questions; this helps us determine which space will be appropriate for our client so that we can give an intelligent quote.

One question that we always ask is what length of lease term a client is seeking. 

The worst response you can give goes something like this: “I don’t want to sign anything longer than month-to-month because I am going to outgrow my space in 3-6 months.”

Let us explain why your prospective landlord is no longer interested.

First, let’s assume that your business has a track record of expansion.  You are in a growth phase, and you truly cannot commit to a space for longer than 3 months because you outgrew your last couple of spaces in that same time frame.  A landlord is not going to want to lease you a space for 3 months!

During that span of time, several other long term tenants might have leased the space and could not wait 3 months to start their lease term.  Sure, you will find a landlord who will lease to you for a short term and jack the price up (and we mean WAY up!), but if your business is in a growth phase, you probably cannot afford to be paying an above-market rental rate.

Signing a month-to-month or short term lease is also bad for your business.  Let’s use the above example where your business can only sign a 3 month lease because it has been growing nonstop.  After 3 months, your growth has started to taper off and you wish to sign another 3 month term in your current location.  You reach out to your landlord for renewal only to find out the landlord has no intention of renewing your lease.  The landlord signed a long term lease and you have 2 weeks to pack up your things and find a new space.  Is that the situation you want for your growing business?

More often than not, when we hear this response, it comes from a business without any sort of track record.  These businesses are usually startups who think that business is going to boom right off the bat.  Businesses take time to grow.  Your projections might show sales increasing by 50% every 3 months, but they are only projections.  Capturing market share does not happen overnight for most businesses.

We understand that you may also be concerned about whether you have a viable business.  And a month-to-month lease sounds like a great way to test the market.  We certainly respect a prospective tenant for being honest about their situation.  However, a month-to-month lease still ties up a space, and while it is a quick fix for a vacancy, it is not a good long term solution.  Sure, we could give notice that the month-to-month tenant has to vacate after the next month like the example given above, but it is just not worth the headache.

Conclusion

We do not take calls seriously when a prospect says they can only sign a short term lease because more than likely, we know the business owner either (1) is wearing blinders about how great business will be, or (2) cannot commit beyond a couple of months because the business is a startup.  Expansion takes time and effort, and you are not going to magically need double the space in 3-6 months.  And again, even if your business does need to double in size after 3 months, you are probably not a good fit for any of our properties (and we are not the only landlords who think so).

Please feel free to leave questions and/or comments.  We read all of them.  Feel free to email us at leasing@seawaybusinesspark.com.  We provide office space for rent and office/warehouse space for rent in Gulfport, Mississippi.  If you need commercial real estate space in our area, please give us a call at (228) 575-7731 or visit our website at www.seawaybusinesspark.com.