The Right Way To Lease Industrial Warehouse Property
Before you start searching for a great warehouse space for rent for your small business, you need to get educated about the commercial space leasing process. Being ready will keep you from making rapid decisions and costly mistakes thatyou will end up regretting in the future. Below are some insider tips to help make an informed choice when letting a commercial property your business
Initiate the process of hunting for commercial rental space at least 6-12 months before your current lease terminates or before your ideal move-in-date. Finding the right 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 require some sort of tenant improvements that the time required will depend on the scope of work.
Thoroughly research your business’s present 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 meanings. Various landlords state and quote things otherwise. If you’re unsure about what they mean don’t be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial rental process or the present market conditions then consider engaging the help of a tenant representative. Their services don’t cost anything because building owners compensate all of the rental fees. The landlord agent will have an professional listing agent helping them so it would be a good idea for you to have one as well.
Physically tour all of the spaces that meet your requirements so thatyou can make a brief list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions about the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Don’t settle for the first commercial properties you think is acceptable for your requirements: continue searching until you have at least 2 to three other options. These additional options will work to your benefit since 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 if the negotiations for your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You never want to have a landlord representative’s verbal word. Everything should 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 each property. A few of the things you need to consider include the dimensions of this space, the asking foundation rental rates, the necessary lease duration, 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’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 above your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate and any operating expenses then dividing by 12.
If any of the commercial property require reconfiguring then it’s important that you figure out what improvements you want on each and get prelim construction bids. That way if the building owner is offering a finish out allowance you will learn how much out of pocket you’ll need to pay above and beyond what the building owner is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to each landlord to negotiate extra concessions. Be sure you fully understand the total expenses you’re 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 have made your selection now it’s time to have the landlord offer you the first draft of this commercial lease contract.
Now it’s time to review the commercial lease 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 as well. Industrial lease language can be negotiated. If you don’t like particular lease items or would like to propose new language now is the time to do so.
When the end of lease contract negotiations has ended the building owner will supply you a draft of the lease to review.
There are several more things to think about when leasing commercial space however these ideas will help get you started. If you’re a new company leasing commercial space for the first time or an current company who has just leased 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a great deal of time and money.