Interested in Renting Flex Space with Friends.
My friends and I are interested in signing a lease for a flex space and I was curious of what to look out for in terms of potential legal issues and so on. I've been scouring the local ads for spaces available and currently have a visit setup for today to view a potential space.

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We're planning to use the space as a type of "maker space" if you will. We're all a creative bunch and enjoy working on projects both large and small but we lack space in our apartments/homes to do so. I believe it'd be a very enjoyable social and creative environment that we could potentially turn into a membership based group to allow others access to the space (though later down the road due to potential legal issues). Essentially this place will be a shared man cave workshop between all of us. Small office space with a open warehouse/bay door.

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Is it common to have around 4 people signing a single lease? Is that the best way to do it? I haven't got the slightest clue! What else should I worry about or think of? Anyone with semi-close experience mind sharing some insight?
[{"id": "efvouhv", "text": "\nMy experience: MBA with emphasis in RE. Been in the business ~5 years and worked as a Tenant rep for a short while and a Landlord rep.\n\n\nYou may reach out to a couple brokers to see if you want representation. They have access to all the listed properties on CoStar.\n\nHere are a few things to think about:\n\nSince it won\u2019t be a business don\u2019t expect a lot of concessions from the Landlord. Unless one of the four of you have really good credit.\n\nExpect the Landlord to ask for some type of financial records from everyone signing the lease.\n\nSign a short term lease to ensure you\u2019re not locked into something for a long period since it\u2019s your first foray. \n\nDon\u2019t ask for a lot of Tenant Improvement allowance and if you don\u2019t use a broker parry that into lower rent. \n\nEverything is negotiable. If possible get caps on CAM and property taxes. Usually a 5% cap on controllable expenses and about the same on Taxes. The LL will fight the taxes but never a bad idea to ask for it. \n\nGet a cap on management fees. 4% cap on Base Rent. The Base is important as you don\u2019t want them being able to charge you 4% on Base rent and Additional rent (additional rent will be defined as you CAM, Taxes, and Insurance or often referred to as NNN).\n\nIf you\u2019re not using a broker go to websites from JLL, Transwestern, Colliers, CBRE etc (any of the big boys) and get the market rent for that area to ensure you\u2019re getting a fair rent. Make sure you\u2019re using the flex/industrial market reports. They may just have reports for office/retail/industrial. If so I\u2019d use the industrial numbers.\n\nWhen negotiating the lease try to get a gross lease instead of NNN. It\u2019s easy to figure out how much the base rent might increase. Example of this would be if market rent is $8 PSF and expenses are $3 PSF. You can try and get a $10-$11 PSF lease. Then if expenses increase to more then $3 you\u2019re protected. Though getting a gross lease would be a feet in itself for a flex space. This allows you to have a consistent bill each month and at the end of the year you won\u2019t need to worry about getting a reconciliation bill. You also won\u2019t benefit from lower expenses if the LL lowers the advertised expenses. Risk/reward though.\n\nThe LL will definitely fight that and may charge you more then Base Rent + Expenses to protect themselves. If you ask for no TI and have no broker use that to your advantage when negotiating. Commission in my area for tenant brokers is 4% and TI is usually $5-$10 PSF. Those would be the savings the LL would have if you use neither of those. \n\nThere are caveats to all of these and hopefully people will add their thoughts on the pros and cons to all of these below.\n\n", "replies": [{"id": "efw8jqv", "text": "&gt; When negotiating the lease try to get a gross lease instead of NNN.\n\nTo add to this, one disadvantage of the gross lease is that because the gross amount is fixed, the landlord is more likely to pad the rate to protect against rising taxes, insurance, and CAM. With a triple-net lease it's a direct pass-through of expenses and should be transparent. Not that there aren't advantages to a gross lease, but base+NNN isn't that bad to end up with either and can be lower overall in early years anyway. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "efvw9os", "text": "When you say flex, to me that usually means nearly 50% office space 50% warehouse. \n\n\nAre you in need of that much office or are you looking for an incubator industrial space, somewhere around 1,000 - 3,000 sqft?", "replies": [{"id": "efvzznn", "text": "I'd lean more towards the industrial space with some office space for more temperature controlled project. We don't need a crazy large space, but also don't want to be cramped together with 5 people all operating on their own projects at time.", "replies": [], "depth": 2}], "depth": 1}, {"id": "efw3kp1", "text": "Good luck. The lease is going to spell out who has access so you may not be able to let others onto the property. There will also be hours you can use the space for to prevent people from living in it. There will be covenants for parking, but if I was the landlord the first thing I would look for is personal guarantees for each member of your group. This means that I can legally come after you if you default. \n\nAlso expect that all members of the lease are joint and several liabilities, so all members of the group are equally bound to the lease. If your buddy cannot cover his portion, you are still legally bound to it. \n\nI would also require a significant down payment, 6 months of rent or more, to cover the lack of income from the group. \n\nBut that is just me, maybe you are in fact essentially renting someones garage instead of a place of business.   ", "replies": [{"id": "efw6qzk", "text": "Thanks for all of that, I didn't know it was all that involved.. We have a local group that does exactly what I mentioned above so I'll have to see how they manage to do what they do and pull through. I did expect as much as far as the liability goes, seeming more and more like too many hoops to jump through for our \"simple\" needs.", "replies": [{"id": "efw9l52", "text": "Depends on the amount of space ect. Sounds like you are looking to rent a big garage instead of an industrial warehouse. \n\nYou may want to organize as a fraternal charity, then the charity is on the lease instead of the individual members. Then if one dude wants to bail he would give up his spot in the charity instead of remaining on the lease and being legally bound to everyone else. ", "replies": [{"id": "efypd1v", "text": "25 year corporate real estate manager here - OP can organize anything he wants but if it's a brand new organization with no assets the LL is going to want personal guarantees from someone. ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "efxtpqj", "text": "So I visited the space, they were very friendly and showed me a very nice 1,200sqft space with about 65% warehouse and the rest office space with bathroom. Comes with a bay door, A/C, internet, and a decent enough area. They don't have limited hours, open to everyone, mentioned my idea of potentially allowing a group in there and they had no issues with anything I mentioned to them. So I found the perfect complex, now just need to work out the legalities of everything and figure out what my friends and I should organize together under so one person will not have to take the hit if someone drops out.", "replies": [], "depth": 1}, {"id": "efyq9uy", "text": "Icanbeyourbackpack had some good points but I may be able to offer some more ideas.  I've been a corporate real estate manager for 25 years, I've negotiated hundreds of leases on a variety of property types and was a commercial appraiser before that. \n\nI've actually looked into stuff like you are talking about previously.  Sometimes people will have a warehouse or flex space building and will rent out or sublet space to people on a month to month basis.  Maybe somebody's spare office would work if you guys will not be too loud or messy.  There are also places for artist types that have studio space, again on a month to month basis or kind of like a co-work situation.  Another option is checking with a mini storage place.  I'd recommend you look at all the commercial listings on Craigslist.  \n\nI've also seen cheap, kind of crappy retail space that people will rent out month to month.  I would highly recommend you guys pursue a month to month or very short term situation unless one of you is a millionaire and is willing to take responsibility for the lease.  If all 4 of you sign it and anyone bails, each of you is \"jointly and serverably liable\", one of you could get stuck with the entire bill. \n\nFeel free to post any more questions you have to me.", "replies": [], "depth": 1}]