Before you start searching for a good warehouse space for rent for your business, you will need to get educated about the commercial real estate leasing procedure. Being prepared should prevent you from making impulsive decisions and costly mistakes you will regret in the future. Below are some insider tips to help make an informed choice when letting a commercial warehouse space your company
Initiate the process of searching commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will require some type of improvements which the time needed will depend on the scope of work.
Thoroughly analyze your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with the commercial property terms and meanings. Different landlords state and quote things otherwise. If you’re in doubt about what they mean do not be afraid to ask them to get more info.
If you’re not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the support of a tenant agent. Their services do not cost anything because building owners compensate all the leasing fees. The landlord agent will have an professional listing agent advising them so it would be a great idea for you to have one also.
Physically tour all the spaces that meet your needs so you can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions regarding the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your needs: continue looking until you have at least two to 3 other options. These extra options will work to your advantage since 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 negotiations to your first choice go sideways.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever need to take a landlord agent’s verbal note. Everything needs to be in writing.
To help you decide what property is most suitable for your company, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you should consider include the dimensions of this 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 calculating the monthly base rents for each property then removing those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial spaces require tenant improvements then it’s important that you determine what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you’ll have 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 additional concessions. Be sure you completely understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After negotiations are finalized and you have made your selection now it’s time to have the landlord provide you the first draft of this commercial rental contract.
Now it’s 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 agent then they could review the lease with you as well. Industrial lease language could be negotiated. If you do not like particular lease items or want to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the building owner will provide you a draft of the lease to sign.
There are several more things to think about when leasing commercial property however these tips will help get you started. If you’re a new company leasing commercial property for the first time or an existing company who has only leased one or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of time and money.
