by Before you start searching for the perfect warehouse space for your business, you must to get informed about the commercial property leasing process. Being prepared will keep you from making expeditious decisions and costly mistakes thatyou will come to regret later on. The following are some insider tips to help make an informed decision when letting a commercial real estate your business
Initiate the process of searching for commercial warehouse space at least 6-12 months before your current lease expires or until your ideal move-in-date. Finding the right 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 type of improvements that the time required will depend on the scope of work.
Thoroughly research 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 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 information.
If you are not familiar with the commercial real estate leasing process or the current market conditions then consider engaging the support of a tenant agent. Their services do not cost you anything since landlords pay all of the leasing commissions. The landlord agent will have an experienced listing agent helping them so it would be a good idea for you to have one too.
Physically see all of the spaces that meet your requirements so thatyou 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 about who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Don’t settle for the first commercial space you believe is suitable for your requirements: continue searching until you have at least 2 to 3 other choices. These additional options will work to your advantage because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to whether the negotiations for your first choice go silent.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever want to take a landlord agent’s verbal word. Everything needs to be in writing.
To help you decide what property is most suitable for your business, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you need to put into consideration include the size of this space, the inquiring base rental rates, the required 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 are budget conscious then you can quickly narrow down the list by calculating the monthly base rents for each property then removing those that are way above your budget. The monthly base rent is calculated by multiplying the industrial 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’s crucial 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 know just how much out of pocket you’ll have to pay above and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to return to each landlord to negotiate extra concessions. Make sure you fully understand the total expenses you are expected to cover. Don’t get emotionally attached to a certain 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 provide you the first draft of this 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 agent 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 want to propose new language today is the time to do so.
Once the end of rental contract negotiations has ended the building owner will give you a draft of the lease to sign.
There are several more things to think about when renting commercial space however these ideas will help get you started. If you are a new business renting commercial property for the first time or an current business who has only leased 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of time and money.
