Before you begin searching for a good warehouse space for your company, you should to get informed about the commercial real estate leasing procedure. Being prepared should keep you from making rapid decisions and costly mistakes you will regret in the future. Below are some insider suggestions to help make an informed choice when renting a commercial warehouse space your business
Start the process of locating commercial space at least 6-12 months before your current lease terminates or before your ideal move-in-date. Locating the correct space and negotiating the deal will require 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will require some type of changes that the time required will depend on the scope of work.
Thoroughly research 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. Different landlords say and quote things otherwise. If you’re unsure about what they mean don’t be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial real estate leasing process or the current market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost anything because building owners compensate all the rental commissions. The landlord rep will have an professional listing agent representing them so it would be a good idea for you to have one too.
Physically tour all the properties 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 agents a great deal of questions regarding who owns the property, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your needs: continue looking until you have at least 2 to three alternative choices. These extra options will work to your benefit because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple building owners competing for your business. 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 choices. These are not legally binding. You never want to have a landlord representative’s verbal word. Everything should 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 each property. A few of the things you should consider include the size of this space, the asking foundation rental rates, the necessary 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’re 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 by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial property require improvements then it is important that you determine what improvements you want on each and get prelim construction bids. This way if the building owner is offering a tenant improvement allowance you will know how much out of pocket you’ll need to pay over and beyond what the building owner is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate additional concessions. Make certain 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 can’t live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of this commercial lease contract.
Now it’s time to reassess the commercial lease contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they can review the lease with you also. Commercial lease language can be negotiated. If you don’t like certain lease items or would like to propose new language today is the time to do so.
When the end of lease contract negotiations has finished the building owner will provide you a copy of the lease to sign.
There are many more things to think about when leasing commercial real estate however these suggestions will help get you going. If you’re a new company leasing space for the first time or an current company who has just rented 1 or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a great deal of time and money.