Before you start searching for a great warehouse space for rent for your business, you will need to get informed about the commercial space leasing process. Being ready will prevent you from making hasty decisions and costly mistakes you will end up regretting later on. Below are some insider tips to help make an informed decision when letting a commercial warehouse space your company
Initiate the process of locating commercial rental space at least 6-12 months before your existing lease terminates or before your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending on the size area and current market conditions. Typically the spaces you like will need some type of modifications which the time required will depend on the scope of work.
completely research your business’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with allthe commercial property terms and definitions. Different landlords state and quote things differently. If you’re unsure about what they mean don’t be afraid to ask them to get more information.
If you’re not familiar with the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost anything because building owners compensate 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.
Personally see all the properties that meet your needs so you can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions about who owns the property, property amenities, required lease term length, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is acceptable for your needs: continue searching until you have at least two to 3 alternative options. These additional options will work to your advantage because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple building owners competing for your tenancy. They also give you something to fall back to if the discussions for your first choice go silent.
Send out proposals to your top three to five options. These are not 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 every property. Some of the things you should put into consideration include the dimensions of the distance, the asking base 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 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 commercial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial spaces need tenant improvements then it is important that you figure out what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you’ll need to pay over 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. Make certain you completely understand the total expenses you’re expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract your business cannot live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord provide you the first draft of the commercial rental contract.
Now it is time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative then they could review the lease with you also. Industrial lease language could be negotiated. If you don’t like certain lease items or want to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the building owner will provide you a copy of the lease to review.
There are several more things to consider when renting commercial property however these suggestions will help get you started. If you’re a new business renting commercial property for the first time or an existing business who has only rented 1 or two spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you’ll save a lot of time and money.