Before you begin looking for a good warehouse space for rent for your startup, you should to get informed about the commercial warehouse leasing process. Being ready should prevent you from making foolish decisions and costly mistakes thatyou will come to regret later on. Below are some insider tips to help make an informed choice when letting a commercial property your company
Initiate the process of searching commercial space at least 6-12 months before your current lease expires or before your ideal move-in-date. Finding the right space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will require some type of improvements that the time needed will depend on the scope of work.
Thoroughly research your company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial real estate terms and meanings. Various landlords say and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to get more information.
If you’re 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 anything because landlords compensate all of the leasing commissions. The landlord representative will have an knowledgable listing agent representing them so it would be a great idea for you to have one also.
Physically tour all of the properties that meet your requirements 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 representatives a great deal of questions regarding the ownership, 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 space you think is suitable for your requirements: continue looking until you have at least two to 3 alternative options. These extra options will work to your advantage because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous landlords competing for your company. They also give you something to fall back to if the discussions to your first choice go sideways.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever want to take a landlord agent’s verbal note. Everything should 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. Some of the things you should put into consideration include the dimensions of this distance, the inquiring foundation rental rates, the required 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’re 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 by the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial properties require tenant finish-outs then it is important that you figure out what changes you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you’ll 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 every landlord to negotiate extra concessions. Make sure you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business can’t live up to.
After discussions are finalized and you have made your selection now it’s time to have the landlord offer 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 representative then they could review the lease with you as well. Commercial lease language could be negotiated. If you don’t like particular lease items or would like to propose new language now is the time to do so.
Once the end of rental contract negotiations has ended the landlord will give you a copy of the lease to sign.
There are several more things to think about when leasing commercial property however these suggestions will help get you going. If you’re a new business leasing commercial property for the first time or an current business who has only leased 1 or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you’ll save a lot of time and money.