Before you start looking for a good warehouse space for rent for your business, you need to get informed about the commercial real estate leasing process. Being prepared will help prevent you from making impulsive decisions and costly mistakes thatyou will come to regret in the future. The following are some insider tips to help make an informed decision when renting a commercial space your company
Initiate the process of hunting commercial space at least 6-12 months before your current lease expires or until your ideal move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will require some sort of improvements that the time required will depend on the scope of work.
Thoroughly examine your business’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with allthe commercial property 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 get more information.
If you are not familiar with the commercial real estate leasing process or the present market conditions then consider engaging the help of a tenant representative. Their services do not cost you anything because landlords pay all the rental fees. The landlord rep will have an expert listing agent helping them so it would be a good idea for you to have one too.
Personally tour 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 agents a lot of questions regarding who owns the property, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you believe is acceptable for your needs: continue searching until you have at least 2 to 3 other options. These extra options will work to your advantage since you will know what to expect throughout the lease negotiations and you will gain more leverage with multiple landlords competing for your company. They also give you something to fall back to whether the negotiations for your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You never want to take a landlord agent’s verbal note. Everything should be in writing.
To help you decide what property is most suitable for your company, 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 dimensions of the distance, the asking foundation rental rates, the required lease term, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons 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 that 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 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. This way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you will need to pay above and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to go back to every landlord to negotiate extra concessions. Make certain you completely understand the total expenses you are expected to cover. Don’t get emotionally attached to a specific property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business cannot 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 the commercial lease contract.
Now it is time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent 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 would like to propose new language now is the time to do so.
When the end of lease contract negotiations has ended the building owner will supply you a draft of the lease to review.
There are many more things to think about when leasing commercial space however these suggestions will help get you started. If you are a new company leasing commercial space for the first time or an current company who has only leased 1 or 2 spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you will save a great deal of time and money.