Before you begin searching for a great warehouse space for rent for your startup company, you need to get informed about the commercial property leasing procedure. Being prepared will keep you from making foolish decisions and costly mistakes thatyou will come to regret later on. Below are some insider suggestions to help make an informed decision when letting a commercial warehouse space your business
Start the process of locating commercial space for lease at least 6-12 months before your current lease terminates or before your ideal move-in-date. Locating 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 require some sort of modifications that the time needed will depend on the scope of work.
completely analyze your business’s current and future needs. Consult with the different 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 otherwise. If you are in doubt about what they mean don’t be afraid to ask them to supply more information.
If you are not knowledgeable about the commercial leasing process or the current market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost anything because landlords compensate all the rental commissions. The landlord agent will have an expert listing agent helping them so it would be a great idea for you to have one too.
Physically visit all the properties that meet your needs so thatyou can make a short list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions about the ownership, 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 2 to three other options. These extra 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 landlords competing for your company. They also give you something to fall back to if the negotiations to your first choice go silent.
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 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 dimensions of the distance, the asking base rental rates, the necessary lease term, and the incremental costs (taxes, insurance, maintenance, etc). You can also take note about the pros and cons of each property. If you are budget conscious then you can quickly narrow down the list by simply calculating the monthly base rents for each property then eliminating 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 expenditures then dividing by 12.
If some 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 know how much out of pocket you will have to pay over and beyond what the landlord is willing 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 completely understand the total expenses you are expected to cover. Do not get emotionally attached to a certain property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business can’t live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of the 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 representative then they can review the lease with you also. Commercial lease language can be negotiated. If you don’t like certain 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 copy of the lease to review.
There are many more things to consider 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 current business who has just rented one or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you will save a great deal of money and time.