Before you start searching for the perfect for your company, you will need to get informed about the commercial warehouse leasing procedure. Being ready should keep you from making impulsive decisions and costly mistakes thatyou will probably regret later on. Below are some insider tips to help make an informed decision when letting a commercial property your business
Initiate the process of searching for commercial space for rent at least 6-12 months before your existing lease expires or until your perfect move-in-date. Locating the correct space and negotiating the deal will require 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some sort of changes which the time needed will depend on the scope of work.
Thoroughly examine your business’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with allthe commercial real estate terms and definitions. Different landlords say and quote things differently. If you are unsure about what they mean don’t 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 support of a tenant rep. Their services don’t cost you anything since landlords pay all of the rental fees. The landlord representative will have an experienced listing agent advising them so it would be a great idea for you to have one also.
Physically 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 reps a great deal of questions regarding the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Do not settle for the first commercial properties you think is acceptable for your needs: continue searching until you have at least two to three other choices. These extra options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your business. They also give you something to fall back to if the discussions to your first choice fall through.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever need to have a landlord representative’s verbal word. Everything needs to be in writing.
To help you decide what property is best suited for your company, prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you need to consider include the size of this distance, the asking foundation rental rates, the necessary 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 which are way above 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 some of the commercial spaces need tenant improvements then it is important that you figure out what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you’ll have to pay above and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate extra concessions. Be sure you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract thatyour 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 also. Industrial lease language can be negotiated. If you don’t like certain lease items or would like to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the landlord will give you a copy of the lease to review.
There are several more things to think about when renting commercial space however these suggestions will help get you started. If you are a new company renting space for the first time or an existing company who has just rented 1 or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you’ll save a lot of money and time.