Denver Commercial Real Estate: The Complete Guide to Locating, Negotiating, and Leasing Commercial Real Estate in Denver

By: Space Selectors   October 5, 2019

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Navigating commercial real estate is tricky, complex, and sprinkled with pitfalls. As such, negative outcomes hide around many corners as you travel through the process. Therefore, prior to revealing how to locate, negotiate and lease commercial real estate in Denver, I highly advise that you use a licensed Denver commercial real-estate professional. They will ensure that you follow the right steps, dot every “I” and cross every “T.”


Now that the cautions have been disclosed, there is great news! Denver is full of opportunity! It is ready for you to stake your claim on a lucrative location in town at a reasonable price and with desirable terms that will allow your company to prosper.


In this guide, you will first learn how to find your ideal location in Denver based on key factors that ensure plentiful clientele while minimizing or leveraging your competition. Then, uncover winning techniques to negotiate your Denver commercial real estate lease agreement to minimize the cost of operating your business. Finally, overview the commercial leasing process and prepare yourself for some unexpected negative possibilities. So, continue reading to discover the best way to locate, negotiate, and lease your commercial real estate in Denver.


Use an endorsed commercial real estate broker

Unless you are highly experienced with Denver commercial real estate and have the confidence to navigate the process on your own, make sure you use a highly recommended local licensed broker. Denver was built by true pioneers who were looking for something better – like you. On top of that, Denver is growing at a rate that continues to outpace the national average. It has a thriving real-estate market that promises potential value throughout the region. Therefore, it is fiercely competitive, with a constantly shifting landscape, which requires a masterful blend of market insight, advanced analytics skills and a sharp instinct.


Your quintessential Denver commercial real-estate broker will have this set of skills to ensure that you receive the best conditions, value and terms on your transaction. Also, they will get the listing broker to provide useful information, which includes the owner’s motivations and challenges, before you proceed. Finally, an exceptional broker will already be a master at locating, negotiating, and leasing Denver commercial real estate. But of course, proceed, so you also understand these skills. As a business owner in Denver, understanding the factors involved with your location will help you maximize the success of your business.


Locating the ideal commercial real estate in Denver


Picking the right location for your business is the most important step. As they say, “location, location, location.” There is more truth to that statement than can be articulated here, so please take this step very seriously. Perform your own location analysis and compare notes with your broker. Although your broker’s analysis may be more comprehensive, comparing notes will ensure that you both understand every factor required by your specific business model. Then, your search will be fully optimized.


There are many factors that go into the formula for selecting the best location for your company. All these factors should be carefully evaluated using statistics and other forms of research. Again, this is the most important step, so due diligence is paramount – the success of your business depends on performing this step meticulously. Therefore, read on to learn the most important factors for locating the ideal commercial real estate in Denver.


Where are your customers?


This is a loaded question. There are many intricacies involved with determining your target market and the demographics of your ideal customer. But if you are going to attract customers in and around Denver, you must ask yourself one of two questions: What neighborhood does your target customer reside or where do you expect your target customer to visit, and why. Then, other factors come into play. Do you expect to draw in foot traffic, or will they arrive by car or light rail. All three of these factors affect the type of building and land you choose.


Who and where is your competition?


Competition is a complicated subject. So, start by investigating similar companies within your desirable area. Then, determine which ones are successful long term, and which ones are new or failing. Finally, evaluate their business model and brand loyalty. It is good to know who you will be up against and how they may help you. They can provide you with new clients who already travel to that region for products or services like yours. Just differentiate your company and beat them at their own game.


Where will you find your best employees?


Finding skilled and reliable employees is difficult. It is important to confirm there are potential candidates near the area you plan to occupy. If your company distributes products abroad, your clientele is not an important factor. Good local employees will be your goal. So, do your homework and think about placing job ads ahead of time, just to confirm you will find good candidates to fill your new job openings after you set up shop in Denver.


Adequate parking space


Parking is a big factor when it comes to both customers and staff. Your business plan should reveal the number of cars you expect to be parked at any given moment during your business hours of operation. To be specific, you must know your maximum expected capacity and the maximum number of employees that will be on staff when your capacity is reached. Then, be sure to add 10 to 20 percent for good margin. Finally, if your primary source of patronage will come from foot traffic, be sure to account for some vehicle parking for customers who prefer to drive to your location and for staff.


What type of structure and land does your company need?


Do you need an office space? Maybe you plan to open a retail store or restaurant. Your type of business will greatly affect the type of structure you require, and the type of land needed. Parking may be a big factor, which requires a sizable lot to pave. Office space is typically the easiest type of property to deal with, but you should make sure you do not pay for more features than you really need. If your clients will come to your location, you must consider signage, parking, foot traffic access, light rail access, and supplier access, just to name the most important considerations.


Denver commercial real estate neighborhoods


There are a few factors to consider regarding neighborhoods. First is safety. It is always
important to consider the safety of your employees, your clients, and your own safety when choosing a neighborhood. Then, class and economy come into play. You wouldn’t put an expensive steak house near fast food restaurants and convenient stores. Consider the economy of the neighborhood before deciding on a location, which complies with target-market demographics – where do they live or where do they go?


Your own Denver commercial real estate visualization


Now that you’ve considered the most important factors that will affect the location you choose, sketch your ideal location or write some content about it to describe what you imagine for your business in Denver. You are the business owner with the vision for your company, so your own visualization is very important to consider. Just be sure to weigh your vision against the previously mentioned factors before making your final decision.


How to negotiate your Denver commercial real estate


Before Negotiating Denver commercial real estate, you must make good preparations. Being prepared ahead of time will allow you to respond quickly to your potential landlord’s demands, needs, desires, and limitations or leeway. For one, make sure you fully understand the owner’s motivations and challenges. Your Denver commercial real estate broker will know how to glean this from the owner or the owner’s broker. Then, research all comps (comparable prices) to understand the amount of rent you can expect to pay at other similar locations. Finally, be sure to fully understand every negative aspect of the specific location to provide you with some negotiating power.


Use empathy to your advantage


Think about the owner’s point-of-view. This will give you some empathy, which will make the owner feel comfortable when negotiating with you. Remember, the more the owner likes dealing with you, the better the deal you may be able to get.


Master your Poker face


Negotiating is like a game of Poker. In Poker, you never reveal the quality of your hand. When negotiating, do not reveal how excited you are about a specific location. If it is everything you are looking for and more, do not convey that to the owner. An experienced broker will already know this, so allow them to negotiate. If the owner sees your positive expressions and hears your enthusiastic comments, they will quickly know they have the upper hand. Silence is another key to success. Therefore, remain silent during negotiations. The less you say, the better.


The importance of face-to-face negotiations


Much of the negotiation groundwork and finalization will take place via email. Documents will be sent and signed online, most of the time. But when it comes to negotiating the amount of the rent and other large-scale items like major repairs and big-ticket items that are included in the deal, always meet in person to discuss those and to negotiate. You will be able to read their body language and tone, in order to better understand their urgency and leeway for negotiation.


Denver commercial real estate lease agreement


Once you find your best commercial location in Denver, the next step is to set up a lease agreement. This starts with a lease Letter of Intent, which formally communicates your intentions regarding the lease agreement. Then, after negotiations have completed, and all the details are agreed upon, the lease agreement is prepared. This is another example of the importance of using a highly recommended Denver commercial real estate broker. They know exactly how to do this correctly and they know how to succeed at getting the best possible deal.


Letter of Intent for a lease


Leasing Denver commercial real estate begins with a lease Letter of Intent. This document ensures agreement between you and the owner prior to writing up the actual lease paperwork. To elaborate, it documents and consolidates the critical points within the overall lease deal. These points include the terms of the lease, in writing. A lease Letter of Intent will help expedite the process by adding efficiency to the overall negotiation of the lease agreement. In brief, it states your intentions ahead of time.


Typical lease terms for Denver commercial real estate


Leasing Denver commercial real estate is a serious commitment, as leases typically last many years. It is a good idea to ensure your ability to assign the lease to another tenant if your business moves or fails. Also, understand your rent obligations over the lease duration. Therefore, consider using a commercial real estate lawyer to review your lease prior to signing. A small fee upfront may save you a great deal of money down the road.


Sometimes lease agreements include a “permitted use” clause, which specifies exactly what activities can be conducted there. When this clause is present, you may be limited when future growth and expansion presents itself. For example, if the clause states you may sell electronics, it is possible that you may not open an electronics repair shop within your space to add to your business.


Many commercial leases contain provisions that escalate the rent amount. For example, a lease may specify exactly when the rent will increase, maybe yearly, or less often. Knowing exactly when the rent will increase allows you to include it in your budget. Always check your lease agreement to determine what insurance is required by you, and what insurance the landlord will carry. It is a good idea to have an insurance company review the insurance clause on your lease agreement to determine what coverage the lease requires and give an estimate on how much that coverage will cost you.


Personal guaranty to lease commercial space


Since a commercial lease is a major commitment, landlords typically require a legal guaranty – an asset of some sort that can be sold to pay the rent. This is usually done through a separate document within the lease agreement itself. Always work to minimize your obligations when guaranteeing your lease.


For more information on locating, negotiating, and leasing commercial real estate in Denver, please contact us today. Space Selectors provides resources for all your Denver commercial real estate needs.


Other Locations we Serve in in the Greater Denver Area: Thornton, Aurora, & Arvada.

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