Before you start looking for a great warehouse space for your company, you need to get informed about the commercial warehouse leasing procedure. Being ready should keep you from making expeditious decisions and costly mistakes thatyou will end up regretting in the future. The following are some insider tips to help make an informed choice when letting a commercial space your business
Initiate the process of finding commercial real estate for lease at least 6-12 months before your existing lease expires or before your perfect move-in-date. Locating the perfect 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 need some type of changes which the time required will depend on the scope of work.
Thoroughly examine 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 definitions. Various landlords say and quote things otherwise. If you’re unsure about what they mean don’t be afraid to ask them to provide 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 representative. Their services don’t cost anything since landlords pay all of the rental commissions. The landlord agent will have an expert listing agent representing them so it would be a great idea for you to have one too.
Personally tour all of 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 representatives a great deal of questions about 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 space you think is suitable for your needs: continue looking until you have at least two to three alternative options. These additional options will work to your advantage because you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords competing for your business. They also give you something to fall back to whether the negotiations to your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You never want to take a landlord representative’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 each property. Some of the things you need to put into consideration include the dimensions of this distance, the inquiring foundation rental rates, the required lease term, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to 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 over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial spaces need tenant improvements then it is 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 need to pay over and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate additional concessions. Make 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 thatyour business cannot live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord offer you the first draft of this commercial lease contract.
Now it is 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 agent then they can review the lease with you as well. Industrial lease language can be negotiated. If you don’t like particular lease items or want to propose new language today is the time to do so.
When the end of lease contract negotiations has ended the building owner will provide you a draft of the lease to sign.
There are several more things to consider when leasing commercial space however these suggestions will help get you going. If you’re a new business leasing space for the first time or an existing business who has just rented 1 or two spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a lot of money and time.