Before you start searching for a good warehouse space for rent for your business, you will need to get informed about the commercial property leasing procedure. Being ready should keep you from making impulsive decisions and costly mistakes you will regret later on. Below are some insider suggestions to help make an informed choice when leasing a commercial warehouse space your business
Start the process of searching commercial space at least 6-12 months before your current lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal will require 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will need some type of improvements that the time required 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 allthe commercial real estate terms and definitions. Various 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 info.
If you are not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the help of a tenant rep. Their services don’t cost you anything because building owners compensate all the leasing commissions. The landlord rep will have an experienced listing agent advising them so it would be a good idea for you to have one as well.
Physically visit all the properties that meet your needs 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 lot of questions about who owns the property, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your needs: continue searching until you have at least two to 3 alternative options. These extra 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 go silent.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever want 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 every property. A few of the things you need to consider include the size of this distance, the asking base rental rates, the required lease duration, 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 eliminating those which are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If any of the commercial spaces need tenant improvements then it’s important that you figure out what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you’ll need to pay over and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to return to every landlord to negotiate additional concessions. Make sure you completely understand the total expenses you are expected to cover. Don’t 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’s time to have the landlord provide you the first draft of this commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant agent then they can review the lease with you as well. Commercial lease language can be negotiated. If you don’t like particular lease items or want 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 copy of the lease to sign.
There are many more things to consider when leasing commercial space however these tips will help get you going. If you are a new business leasing commercial space for the first time or an current business who has only leased 1 or two spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a great deal of money and time.