Before you begin looking for a good warehouse space for rent for your company, you need to get informed about the commercial real estate leasing procedure. Being prepared should keep you from making hasty decisions and costly mistakes thatyou will end up regretting later on. Below are some insider suggestions to help make an informed choice when letting a commercial space your business
Start the process of hunting commercial space at least 6-12 months before your current lease expires or before your perfect move-in-date. Finding the right space and negotiating the deal alonewill require 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some sort of improvements that the time needed will depend on the scope of work.
completely examine your company’s present 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. Various landlords state and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to get more information.
If you are not knowledgeable about the commercial rental process or the present market conditions then consider engaging the help of a tenant rep. Their services don’t cost you anything because landlords compensate all of the rental commissions. The landlord representative will have an expert listing agent representing them so it would be a great idea for you to have one also.
Physically visit all of the spaces that meet your requirements so thatyou can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions regarding 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 think is suitable for your requirements: continue looking until you have at least two to 3 other choices. These extra options will work to your benefit because you will know what to expect throughout the lease negotiations and you will gain more leverage with multiple landlords competing for your business. 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 choices. These aren’t legally binding. You never 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 company, prepare a spreadsheet to do an apples to apples comparison of every property. Some of the things you need to consider include the dimensions of the space, the asking foundation rental rates, the necessary lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons 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 that 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 expenses then dividing by 12.
If some of the commercial spaces need tenant improvements then it’s crucial that you determine what improvements you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you will need to pay over and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to return to every landlord to negotiate additional concessions. Be certain you completely 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 thatyour business cannot live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord provide you the first draft of the commercial rental contract.
Now it is time to review the commercial rental 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 also. Commercial lease language could be negotiated. If you don’t like particular lease items or want to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the landlord will give you a draft of the lease to review.
There are several more things to consider when renting commercial real estate however these tips will help get you going. If you are a new company renting space for the first time or an current company who has just rented 1 or two spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a great deal of time and money.