Before you begin looking for a great warehouse space for your business, you need to get informed about the commercial property leasing process. Being ready will help prevent you from making expeditious decisions and costly mistakes thatyou will probably regret later on. Below are some insider suggestions to help make an informed choice when renting a commercial warehouse space your company
Start the process of finding commercial space for lease at least 6-12 months before your current lease terminates or until your perfect move-in-date. Finding the right space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. Typically the spaces you like will need some type of tenant improvements that the time needed will depend on the scope of work.
Thoroughly analyze your company’s current and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with the commercial real estate terms and meanings. Various landlords say and quote things otherwise. If you are in doubt about what they mean do not be afraid to ask them to supply more information.
If you are not familiar with the commercial leasing process or the current market conditions then consider engaging the support of a tenant agent. Their services do not cost anything because landlords pay all the leasing commissions. The landlord agent will have an expert listing agent helping them so it would be a great idea for you to have one also.
Personally visit all the properties that meet your needs so thatyou can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a great deal of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is prepared to give in tenant construction allowances, etc..
Don’t settle for the first commercial properties you believe is acceptable for your needs: continue looking until you have at least 2 to 3 other options. These extra options will work to your benefit since you will know what to expect during the lease negotiations and you will gain more leverage with multiple landlords competing for your tenancy. They also give you something to fall back to whether the negotiations to your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever need to have a landlord representative’s verbal note. Everything should be in writing.
To help you decide what property is best suited for your company, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you need to consider include the dimensions of this space, the asking foundation rental rates, the required lease duration, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages of each property. If you are budget conscious then you can quickly narrow down the list by calculating the monthly base rents for each property then removing those which are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial spaces need 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 how much out of pocket you will have to pay above and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate extra concessions. Be sure you completely understand the total expenses you are expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord offer you the first draft of this commercial rental contract.
Now it is time to review the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they can review the lease with you also. Industrial lease language can be negotiated. If you do not like particular lease items or want to propose new language now is the time to do so.
When the end of rental contract negotiations has ended the building owner will give you a draft of the lease to review.
There are several more things to think about when renting commercial property however these suggestions will help get you started. If you are a new company renting commercial space for the first time or an current company who has just leased 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you will save a great deal of time and money.
