Before you begin looking for a great warehouse space for rent for your small company, you will need to get educated about the commercial property leasing process. Being ready will keep you from making hurried decisions and costly mistakes you will regret in the future. The following are some insider tips to help make an informed choice when letting a commercial property your business
Start the process of locating commercial warehouse space at least 6-12 months before your current lease expires or before your perfect move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending on the size area 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.
completely examine your company’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with allthe commercial property terms and definitions. Various landlords state and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to get more info.
If you are not familiar with the commercial rental process or the current market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost you anything because building owners pay all the leasing commissions. The landlord rep will have an knowledgable listing agent helping them so it would be a good idea for you to have one too.
Personally see all the spaces that meet your needs so you can make a brief list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant improvement allowances, etc..
Do not settle for the first commercial properties you believe is suitable for your needs: continue searching until you have at least two to 3 other choices. These additional options will work to your benefit because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous building owners competing for your company. They also give you something to fall back to whether the negotiations to your first choice go sideways.
Send out proposals to your top three to five choices. These aren’t legally binding. You never want to take a landlord agent’s verbal word. Everything should 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. A few of the things you should put into consideration include the size of the space, the inquiring foundation rental rates, the necessary lease duration, 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 over your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial spaces require tenant improvements then it’s critical that you determine what improvements you want on each and get construction bids. That way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you’ll have to pay over and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to each landlord to negotiate additional concessions. Be sure you completely understand the total expenses you are 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 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 the commercial lease contract.
Now it is time to review the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent then they could review the lease with you also. Industrial lease language could be negotiated. If you don’t like certain lease items or would like to propose new language today is the time to do so.
Once the end of lease contract negotiations has ended the building owner will supply you a copy of the lease to review.
There are several more things to consider when leasing commercial property however these suggestions will help get you going. If you are a new company leasing commercial property for the first time or an current company who has just rented 1 or two spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a lot of time and money.