Before you start searching for a good warehouse space for rent for your small company, you will need to get educated about the commercial real estate leasing process. Being prepared will keep you from making foolish decisions and costly mistakes thatyou will end up regretting later on. Below are some insider tips to help make an informed choice when letting a commercial real estate your company
Initiate 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 right space and negotiating the deal alonewill require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some type of improvements which the time needed will depend on the scope of work.
completely research your business’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with the commercial space terms and definitions. Different landlords state and quote things otherwise. If you’re unsure about what they mean do not be afraid to ask them to supply more information.
If you’re not knowledgeable about the commercial leasing process or the current market conditions then consider engaging the assistance of a tenant rep. Their services do not cost you anything because building owners pay all of the leasing fees. The landlord agent will have an experienced listing agent helping them so it would be a good idea for you to have one also.
Personally tour all of the properties that meet your requirements so thatyou can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions regarding who owns the property, 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 acceptable for your requirements: continue looking until you have at least 2 to three alternative options. These additional options will work to your benefit because you will know what to expect during the lease negotiations and you will gain more leverage with numerous building owners competing for your tenancy. They also give you something to fall back to whether the negotiations 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 want to take a landlord agent’s verbal note. Everything should be in writing.
To help you decide what property is best suited for your business, 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 space, the inquiring base rental rates, the required lease duration, and the incremental expenses (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 which are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial buildings need tenant finish-outs then it is critical that you figure out what improvements you want on each and get construction bids. That way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you will need to pay above 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. Be certain you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a specific property until the negotiations are over. Emotional attachment might lead to you signing a contract thatyour business cannot live up to.
After negotiations are finalized and you’ve made your selection now it is time to have the landlord offer you the first draft of the commercial rental contract.
Now it is time to review the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you also. Industrial lease language could be negotiated. If you do not like particular lease items or want to propose new language now is the time to do so.
When the end of rental contract negotiations has ended the building owner will provide you a copy of the lease to sign.
There are several more things to consider when leasing commercial property however these tips will help get you going. If you’re a new business leasing 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 will save a lot of time and money.