Before you begin looking for the perfect warehouse space for your business, you need to get informed about the commercial space leasing procedure. Being prepared should keep you from making impulsive decisions and costly mistakes you will regret later on. The following are some insider suggestions to help make an informed decision when renting a commercial warehouse space your company
Start the process of searching commercial space at least 6-12 months before your current lease expires or until your ideal move-in-date. Finding the correct space and negotiating the deal alonewill require 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will require some sort of improvements that the time needed will depend on the scope of work.
completely analyze your business’s current 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 definitions. Different landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to provide more info.
If you are not knowledgeable about the commercial rental process or the current market conditions then consider engaging the assistance of a tenant rep. Their services do not cost anything since landlords pay all the leasing fees. The landlord representative will have an experienced listing agent advising them so it would be a great idea for you to have one as well.
Personally tour all the properties that meet your requirements so you can make a brief list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions about the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Do not settle for the first commercial space you believe is suitable for your requirements: continue searching until you have at least 2 to 3 other options. These extra options will work to your advantage because you will know what to expect during the lease negotiations and you will gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to whether the discussions for your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You never need to have a landlord agent’s verbal note. Everything needs to 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 each property. Some of the things you should put into consideration include the dimensions of this distance, the asking foundation rental rates, the required 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 are budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then removing those that are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If any of the commercial buildings require tenant finish-outs then it is essential that you determine what changes you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will 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 makes sense to return to each landlord to negotiate additional concessions. Make sure you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might result in you signing a contract your business can’t live up to.
After discussions are finalized and you’ve 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 representative then they can review the lease with you as well. Industrial lease language can be negotiated. If you do not like particular lease items or would like to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the landlord will provide you a draft of the lease to sign.
There are many more things to consider when leasing commercial space however these ideas will help get you started. If you are a new business leasing commercial space for the first time or an current business who has just rented one 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.