Before you begin searching for a great warehouse space for rent for your small company, you need to get informed about the commercial property leasing process. Being ready will keep you from making expeditious decisions and costly mistakes thatyou will regret in the future. The following are some insider suggestions to help make an informed decision when letting a commercial warehouse space your business
Initiate the process of hunting for commercial space at least 6-12 months before your current lease terminates or before your ideal move-in-date. Locating the correct space and negotiating the deal will require 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will require some sort of changes that the time required will depend on the scope of work.
Thoroughly analyze your company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial space terms and definitions. Various landlords state and quote things otherwise. If you’re unsure about what they mean do not be afraid to ask them to supply more information.
If you’re not familiar with the commercial property leasing process or the current market conditions then consider engaging the help of a tenant agent. Their services do not cost anything since building owners compensate all the leasing commissions. The landlord representative will have an experienced listing agent helping them so it would be a good idea for you to have one also.
Personally visit all the properties that meet your requirements so thatyou can make a brief list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps 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 construction allowances, etc..
Do not settle for the first commercial space you think is suitable for your requirements: continue searching until you have at least 2 to three other options. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple building owners competing for your company. They also give you something to fall back to whether the discussions for your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever want to take a landlord agent’s verbal note. Everything needs to be in writing.
To help you decide what property is best suited for your business, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you need to put into consideration include the size of the distance, the inquiring foundation rental rates, the required lease term, and the incremental expenses (taxes, insurance, maintenance, etc). You can also 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 removing those that 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 expenditures then dividing by 12.
If any of the commercial spaces require tenant improvements then it’s 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 learn 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 is logical to return to every landlord to negotiate extra concessions. Be sure you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After discussions are finalized and you’ve made your selection now it’s time to have the landlord provide you the first draft of the commercial rental contract.
Now it’s time to review the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent then they can review the lease with you also. Industrial lease language can be negotiated. If you do not like particular lease items or would like to propose new language now is the time to do so.
When the end of rental 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 leasing commercial real estate however these suggestions will help get you started. If you’re a new business leasing space 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 don’t cost you anything and you’ll save a great deal of time and money.