Before you begin searching for a good warehouse space for rent for your small company, you need to get educated about the commercial warehouse leasing procedure. Being ready should help prevent you from making hasty decisions and costly mistakes thatyou will come to regret in the future. The following are some insider tips to help make an informed choice when letting a commercial space your business
Start the process of hunting for commercial space at least 6-12 months before your existing lease terminates or before your perfect move-in-date. Finding the perfect space and negotiating the deal alonewill take 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will require some type of tenant improvements that the time required will depend on the scope of work.
Thoroughly analyze your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with allthe commercial property terms and meanings. Various landlords say and quote things differently. If you are unsure about what they mean do not be afraid to ask them to provide more info.
If you are not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant rep. Their services do not cost anything since building owners pay all of the rental commissions. The landlord rep will have an expert listing agent advising them so it would be a good idea for you to have one also.
Personally visit all of the spaces 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 representatives a great deal of questions regarding the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Do not settle for the first commercial properties you believe is suitable for your needs: continue looking until you have at least two to three alternative choices. These extra options will work to your advantage because you will know what to expect during 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 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 don’t ever need to take a landlord representative’s verbal word. Everything needs to be in writing.
To help you decide what property is most suitable for your company, 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 size of this space, the asking base rental rates, the required lease term, and the incremental costs (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 over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial spaces require tenant improvements then it’s important 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 learn how much out of pocket you’ll have to pay over and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to every landlord to negotiate extra concessions. Make certain you completely understand the total expenses you are expected to cover. Do not get emotionally attached to a specific 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 have 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 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 as well. Commercial lease language could be negotiated. If you do not like certain lease items or would like to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the landlord will supply you a copy of the lease to review and sign.
There are several more things to consider when leasing commercial real estate however these suggestions will help get you going. If you are a new company leasing commercial property for the first time or an existing company who has only rented one or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a great deal of time and money.