Before you start searching for a good warehouse space for rent for your startup, you must to get educated about the commercial real estate leasing procedure. Being ready will keep you from making hasty decisions and costly mistakes you will regret in the future. Below are some insider tips to help make an informed choice when renting a commercial real estate your company
Start the process of hunting for commercial space at least 6-12 months before your current lease terminates or before your perfect move-in-date. Locating the perfect space and negotiating the deal alonewill take 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will require some type of modifications which the time needed will depend on the scope of work.
completely research your business’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with allthe commercial real estate terms and meanings. Various landlords say and quote things differently. If you’re in doubt about what they mean do not be afraid to ask them to supply more information.
If you’re not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the assistance of a tenant representative. Their services do not cost you anything because landlords pay all the leasing commissions. The landlord representative will have an experienced listing agent representing them so it would be a great idea for you to have one also.
Physically tour all the spaces that meet your requirements so you can make a brief list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions about who owns the property, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Do not settle for the first commercial properties you believe is suitable for your requirements: continue searching until you have at least 2 to three alternative choices. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords competing for your company. They also give you something to fall back to if the negotiations to your first choice go sideways.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever want to take a landlord agent’s verbal word. Everything needs to be in writing.
To help you decide what property is most suitable for your business, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you need to put into consideration include the dimensions of this distance, the inquiring foundation rental rates, the required lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages of each property. If you’re budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then eliminating those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces require tenant improvements then it is important that you determine what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you’ll have to pay over and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate extra concessions. Be sure you fully understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract your business can’t live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord provide you the first draft of this commercial lease contract.
Now it is time to reassess the commercial lease contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you as well. Industrial lease language could be negotiated. If you do not like certain lease items or want to propose new language today is the time to do so.
Once the end of lease contract negotiations has ended the landlord will give you a copy of the lease to review.
There are several more things to think about when renting commercial real estate however these tips will help get you going. If you’re a new business renting commercial property for the first time or an current business who has only rented one or 2 spaces then consider getting help from a tenant representative. Their services do not cost you anything and you’ll save a lot of time and money.
