Before you start looking for a great warehouse space for rent for your small company, you must to get informed about the commercial property leasing process. Being prepared should keep you from making hurried decisions and costly mistakes you will regret in the future. Below are some insider suggestions to help make an informed choice when letting a commercial space your company
Start the process of locating commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Locating the perfect space and negotiating the deal alonewill require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will require some sort of modifications which the time needed will depend on the scope of work.
Thoroughly examine your business’s current and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with the commercial real estate terms and definitions. Different landlords say and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to supply more information.
If you are not knowledgeable about the commercial real estate leasing 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 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 also.
Personally visit all the properties that meet your requirements so you 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 great deal of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Do not settle for the first commercial space you believe is acceptable for your requirements: continue searching until you have at least 2 to three alternative options. These additional options will work to your advantage since you will know what to expect during 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 for your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever need to take a landlord representative’s verbal note. Everything needs to 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 distance, the inquiring base rental rates, the required lease term, and the incremental costs (taxes, insurance, maintenance, etc). You can also 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 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 expenses then dividing by 12.
If any of the commercial spaces require tenant improvements then it is important that you figure out what improvements you want on each and get preliminary bids. This 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 analyze and compare the terms of each proposal. Consider whether it is logical to go back to every landlord to negotiate extra concessions. Be sure you fully 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 your 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 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 as well. Industrial lease language can be negotiated. If you don’t like particular lease items or would like to propose new language today is the time to do so.
Once the end of rental contract negotiations has ended the building owner will give you a draft of the lease to review.
There are many more things to think about when leasing commercial real estate however these ideas will help get you going. If you are a new business leasing space for the first time or an existing business who has only rented one or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of time and money.