Before you start looking for the perfect warehouse space for your business, you will need to get educated about the commercial real estate leasing procedure. Being ready will prevent you from making expeditious decisions and costly mistakes thatyou will regret in the future. The following are some insider tips to help make an informed decision when letting a commercial warehouse space your business
Start the process of finding commercial warehouse space at least 6-12 months before your existing lease terminates or before your ideal move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. Typically the spaces you like will need some type of modifications which the time needed will depend on the scope of work.
completely examine your business’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with allthe commercial real estate terms and meanings. Different landlords state and quote things differently. If you’re in doubt about what they mean do not be afraid to ask them to provide more information.
If you’re not familiar with the commercial leasing process or the present market conditions then consider engaging the support of a tenant agent. Their services do not cost you anything since landlords pay all the leasing commissions. The landlord rep will have an professional listing agent advising them so it would be a good idea for you to have one as well.
Physically visit all the properties that meet your requirements so thatyou can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps 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 improvement allowances, etc..
Do not settle for the first commercial properties you think is acceptable for your requirements: continue searching until you have at least 2 to 3 alternative options. These additional options will work to your benefit because you will know what to expect throughout the lease negotiations and you will gain more leverage with multiple landlords competing for your tenancy. 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 are not legally binding. You don’t ever want to have 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 each property. A few of the things you should consider include the size of the distance, the inquiring base rental rates, the necessary 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 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 plus any operating expenditures then dividing by 12.
If any of the commercial spaces need tenant improvements then it is essential that you figure out what changes you want on each and get bids from contractors. That way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will have 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 go back to each landlord to negotiate additional concessions. Make sure you fully understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business can’t 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 the commercial rental contract.
Now it is time to reassess the commercial rental contract. It would be wise for you to hire an attorney to review the lease. For those who have a tenant representative then they can review the lease with you also. Industrial lease language can 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 give you a draft of the lease to review.
There are several more things to think about when renting commercial property however these tips will help get you started. If you’re a new business renting space for the first time or an existing business who has only leased 1 or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you will save a great deal of money and time.