Before you start looking for a good warehouse space for rent for your company, you will need to get educated about the commercial warehouse leasing process. Being ready should prevent you from making hurried decisions and costly mistakes thatyou will come to regret in the future. Below are some insider tips to help make an informed decision when letting a commercial space your business
Start the process of searching for commercial real estate for lease at least 6-12 months before your current lease terminates or before your perfect move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some sort of modifications that the time required will depend on the scope of work.
Thoroughly analyze your business’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with the commercial real estate terms and meanings. Various landlords say and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to get more information.
If you are not familiar with the commercial rental process or the current market conditions then consider engaging the support of a tenant representative. Their services don’t cost you anything because landlords compensate all the rental commissions. The landlord agent will have an knowledgable listing agent representing them so it would be a great idea for you to have one too.
Personally visit all the spaces that meet your needs so thatyou can make a short list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions about who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you think is suitable for your needs: continue looking until you have at least 2 to 3 other choices. These extra options will work to your benefit since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous landlords 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 choices. These are not legally binding. You never want to have a landlord representative’s verbal note. 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 size of the distance, the asking base rental rates, the necessary lease duration, and the incremental costs (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 eliminating those that are way above 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 some of the commercial properties need changes then it is important that you determine what changes you want on each and get preliminary bids. That way if the landlord is offering a construction allowance you will learn how much out of pocket you’ll 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 return to each landlord to negotiate additional concessions. Make sure you fully understand the total expenses you are expected to cover. Don’t 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 reassess the commercial rental contract. It would be wise 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 would like to propose new language now is the time to do so.
Once the end of rental contract negotiations has finished the landlord will supply you a draft of the lease to sign.
There are many more things to consider when renting commercial real estate however these tips will help get you going. If you are a new business renting commercial space for the first time or an current business who has only leased 1 or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a great deal of money and time.