Before you start searching for a good warehouse space for rent for your startup, you need to get educated about the commercial warehouse leasing process. Being ready should help prevent you from making foolish decisions and costly mistakes thatyou will regret in the future. Below are some insider suggestions to help make an informed choice when leasing a commercial property your company
Start the process of searching for commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Locating the correct space and negotiating the deal will require 1-2 months depending on the size area and current market conditions. Typically 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 business’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial real estate terms and definitions. Different landlords state and quote things differently. If you’re unsure about what they mean do not be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial real estate leasing process or the current market conditions then consider engaging the assistance of a tenant rep. Their services do not cost anything because building owners compensate all the leasing fees. The landlord agent will have an professional listing agent advising them so it would be a great idea for you to have one as well.
Personally visit all the spaces that meet your requirements so thatyou can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions about who owns the property, 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 space you believe is suitable for your requirements: continue looking until you have at least two to three alternative choices. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you will gain more leverage with multiple building owners competing for your business. They also give you something to fall back to if the negotiations for 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 agent’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 each property. Some of the things you should put into consideration include the size of the distance, the inquiring foundation rental rates, the necessary lease term, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the advantages and disadvantages of each property. If you’re 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 industrial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial properties need reconfiguring then it is important that you figure out what changes you want on each and get preliminary bids. That way if the building owner is offering a tenant improvement allowance you will learn just how much out of pocket you will have to pay over and beyond what the building owner is prepared to give.
Carefully analyze 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 fully understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After negotiations are finalized and you have made your selection now it’s time to have the landlord provide you the first draft of the commercial lease contract.
Now it’s time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative 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 want to propose new language today is the time to do so.
Once the end of lease contract negotiations has finished the building owner will provide you a draft of the lease to sign.
There are many more things to consider when leasing commercial property however these ideas will help get you going. If you’re a new business leasing commercial space for the first time or an existing business who has only leased 1 or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you will save a lot of time and money.