Before you start looking for a good warehouse space for rent for your small business, you will need to get educated about the commercial real estate leasing process. Being ready should prevent you from making rapid decisions and costly mistakes thatyou will probably regret later on. The following are some insider suggestions to help make an informed decision when letting a commercial real estate your company
Initiate the process of finding commercial real estate for lease at least 6-12 months before your current lease expires or until your perfect move-in-date. Finding the perfect space and negotiating the deal will take 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will need some sort of tenant improvements which the time needed will depend on the scope of work.
completely analyze your company’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with the commercial space terms and meanings. Different landlords say and quote things differently. If you’re unsure about what they mean don’t be afraid to ask them to provide more information.
If you’re not knowledgeable about the commercial rental process or the present market conditions then consider engaging the assistance of a tenant rep. Their services don’t cost anything because building owners compensate all the leasing fees. The landlord agent will have an professional listing agent helping them so it would be a good idea for you to have one too.
Physically tour all 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 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 think is suitable for your needs: continue searching until you have at least two to three alternative choices. These additional options will work to your advantage since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple building owners competing for your company. They also give you something to fall back to if the discussions for your first choice go silent.
Send out proposals to your top three to five choices. These aren’t legally binding. You never need to take a landlord agent’s verbal note. Everything should 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 every property. Some of the things you need to put into consideration include the dimensions of the space, the asking base rental rates, the necessary lease term, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons of each property. If you’re 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 over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces need tenant improvements then it is important that you determine what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you’ll need to pay over and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate additional concessions. Make sure you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord offer you the first draft of the commercial rental contract.
Now it is 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 agent then they can review the lease with you also. Industrial lease language can be negotiated. If you don’t like certain lease items or want to propose new language now is the time to do so.
When the end of rental contract negotiations has ended the building owner will provide you a copy of the lease to review.
There are several more things to think about when renting commercial space however these ideas will help get you going. If you’re a new business renting commercial space for the first time or an current business who has just leased one or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of money and time.