Before you begin looking for the perfect warehouse space for your business, you will need to get informed about the commercial warehouse leasing procedure. Being prepared will prevent you from making hasty decisions and costly mistakes thatyou will end up regretting in the future. Below are some insider tips to help make an informed choice when renting a commercial property your business
Start the process of searching commercial space at least 6-12 months before your current lease expires 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. In most cases the spaces you like will need some sort of improvements which the time required will depend on the scope of work.
Thoroughly analyze your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with allthe commercial real estate terms and meanings. Various landlords say and quote things otherwise. If you’re unsure about what they mean do not be afraid to ask them to provide more information.
If you’re not familiar with the commercial property leasing process or the present market conditions then consider engaging the help of a tenant representative. Their services do not cost you anything since building owners pay all the leasing commissions. The landlord representative will have an expert listing agent advising them so it would be a good idea for you to have one also.
Physically visit all the properties that meet your requirements 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 the ownership, 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 properties you believe is acceptable for your requirements: continue looking until you have at least 2 to three 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 building owners competing for your business. They also give you something to fall back to whether the discussions for 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 take a landlord representative’s verbal note. Everything should 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 consider include the size of this space, the asking foundation rental rates, the necessary lease term, and the incremental costs (taxes, insurance, maintenance, etc). You can also take note about the pros and cons 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 eliminating those that are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces need finish out then it is important that you determine what changes you want on each and get construction bids. This way if the building owner is offering a finish out allowance you will learn just how much out of pocket you will have to pay over and beyond what the building owner 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. Be certain you fully 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 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 is time to have the landlord provide you the first draft of this commercial rental contract.
Now it is 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 as well. Industrial lease language could be negotiated. If you do not like certain lease items or want to propose new language now is the time to do so.
Once the end of rental contract negotiations has finished the building owner will give you a draft of the lease to review and sign.
There are several more things to think about when renting commercial real estate however these ideas will help get you going. If you’re a new business renting space for the first time or an current business who has only rented 1 or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a great deal of money and time.