Before you start searching for a good warehouse space for rent for your business, you will need to get informed about the commercial property leasing procedure. Being prepared should prevent you from making rash decisions and costly mistakes thatyou will probably regret later on. The following are some insider tips to help make an informed choice when leasing a commercial property your company
Start the process of searching for commercial space for rent at least 6-12 months before your existing lease terminates or until your ideal move-in-date. Locating the correct space and negotiating the deal alonewill require 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will need some type of tenant improvements that the time required will depend on the scope of work.
Thoroughly examine your business’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with the commercial real estate terms and meanings. Various landlords state and quote things otherwise. If you are unsure about what they mean don’t be afraid to ask them to supply more information.
If you are not familiar with the commercial real estate leasing process or the current market conditions then consider engaging the assistance of a tenant rep. Their services don’t cost anything since building owners compensate all the leasing commissions. The landlord rep will have an expert listing agent helping them so it would be a great idea for you to have one also.
Physically visit all the properties that meet your needs so thatyou can make a brief list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions about the ownership, 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 space you think is suitable for your needs: continue searching until you have at least 2 to 3 other choices. These extra options will work to your advantage because you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous building owners competing for your company. 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 choices. These aren’t legally binding. You never need to take a landlord agent’s verbal word. 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. Some of the things you need to consider include the size of the distance, the asking foundation rental rates, the required lease duration, and the incremental expenses (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 eliminating those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate and any operating expenses then dividing by 12.
If some of the commercial buildings need tenant finish-outs then it is critical that you determine what improvements you want on each and get construction bids. That 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 is logical to return to every landlord to negotiate extra concessions. Be 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 cannot live up to.
After discussions are finalized and you have made your selection now it’s time to have the landlord provide you the first draft of the commercial lease contract.
Now it’s time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative then they can review the lease with you also. Industrial lease language can be negotiated. If you don’t like particular lease items or would like to propose new language today is the time to do so.
Once the end of lease contract negotiations has finished the landlord will provide you a draft of the lease to review.
There are several more things to think about when renting commercial real estate however these suggestions will help get you going. If you are a new company renting commercial property for the first time or an existing company who has only rented one or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a lot of money and time.