Before you start searching for the perfect warehouse space for rent for your small company, you need to get informed about the commercial real estate leasing process. 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 letting a commercial real estate your company
Start the process of locating commercial space at least 6-12 months before your current lease terminates or until your perfect move-in-date. Locating the right space and negotiating the deal alonewill require 1-2 months depending upon the size area 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 company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with the commercial property terms and definitions. Different landlords say and quote things differently. If you’re unsure about what they mean do not be afraid to ask them to get more information.
If you’re not familiar with the commercial rental process or the current market conditions then consider engaging the help of a tenant representative. Their services do not cost you anything since landlords compensate all of the leasing fees. The landlord representative will have an knowledgable listing agent helping them so it would be a good idea for you to have one as well.
Personally tour all of the spaces that meet your requirements 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 about the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial properties you believe is acceptable for your requirements: continue looking until you have at least 2 to 3 other choices. These extra options will work to your benefit since you will know what to expect throughout 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 negotiations to your first choice fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You never want to have a landlord representative’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 every property. A few of the things you need to consider include the dimensions of the space, the asking base rental rates, the necessary lease term, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the advantages and disadvantages 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 that 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 expenditures then dividing by 12.
If any of the commercial buildings need tenant finish-outs then it is important that you determine what changes you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you will 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. Make certain you fully understand the total expenses you’re expected to cover. Do not 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 the commercial rental contract.
Now it’s time to review the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant agent then they can review the lease with you as well. Industrial lease language can be negotiated. If you do not like certain lease items or want to propose new language now is the time to do so.
Once the end of rental contract negotiations has finished the building owner will supply you a copy of the lease to sign.
There are many more things to consider when renting commercial real estate however these suggestions will help get you going. If you’re a new business renting commercial space for the first time or an current business who has only leased 1 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 time and money.