Before you begin looking for an excellent warehouse space for rent for your company, you will need to get educated about the commercial property leasing process. Being ready should prevent you from making foolish decisions and costly mistakes thatyou will probably regret later on. Below are some insider suggestions to help make an informed choice when renting a commercial warehouse space your business
Initiate the process of finding commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some type of modifications which the time required will depend on the scope of work.
Thoroughly analyze your company’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with the commercial real estate terms and meanings. Different landlords say and quote things differently. If you are in doubt about what they mean don’t be afraid to ask them to provide more information.
If you are not familiar with the commercial leasing process or the present market conditions then consider engaging the support of a tenant rep. Their services don’t cost anything because landlords pay all of the rental commissions. The landlord rep will have an professional listing agent representing them so it would be a good idea for you to have one as well.
Personally tour all of the properties that meet your needs so thatyou can make a short list. Bear in mind that the layouts 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 term length, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you think is acceptable for your needs: continue searching until you have at least two to 3 alternative choices. These additional options will work to your benefit since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple landlords competing for your tenancy. They also give you something to fall back to whether the negotiations for your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever want 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 business, prepare a spreadsheet to do an apples to apples comparison of every property. Some of the things you should consider include the size of this space, the inquiring foundation rental rates, the required lease term, 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 simply 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 commercial space square feet by the asking base rate and any operating expenditures then dividing by 12.
If any of the commercial properties need changes then it’s important that you figure out what changes you want on each and get construction bids. This way if the building owner is offering a tenant improvement allowance you will know how much out of pocket you’ll need to pay above and beyond what the building owner is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to return to every landlord to negotiate extra concessions. Be 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 cannot live up to.
After negotiations are finalized and you’ve made your selection now it is time to have the landlord offer 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 also. 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 rental contract negotiations has finished the building owner will supply you a copy of the lease to review.
There are many more things to consider when renting commercial real estate however these ideas will help get you going. If you are a new business renting commercial space for the first time or an existing business who has just rented 1 or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a lot of time and money.