Before you start searching for a good warehouse space for rent for your business, you must to get educated about the commercial property leasing process. Being ready will help prevent you from making foolish decisions and costly mistakes thatyou will end up regretting in the future. The following are some insider tips to help make an informed choice when renting a commercial property your company
Start the process of finding commercial real estate for lease 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 take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some type of changes which the time required will depend on the scope of work.
completely research your business’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with the commercial property terms and definitions. Various landlords say and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial property leasing process or the present market conditions then consider engaging the support of a tenant rep. Their services don’t cost you anything because landlords compensate all the leasing commissions. The landlord rep will have an experienced listing agent representing them so it would be a good idea for you to have one too.
Personally visit all the spaces 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 agents a lot of questions about who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Don’t settle for the first commercial properties you believe is acceptable for your requirements: continue searching 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’ll gain more leverage with numerous landlords competing for your company. They also give you something to fall back to whether the negotiations to your first choice fall through.
Send out proposals to your top three to five choices. These are not legally binding. You never want to have 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 required lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages 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 commercial space square feet by the asking base rate and any operating expenditures then dividing by 12.
If any of the commercial spaces need tenant improvements then it is 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 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 is logical to return to each landlord to negotiate additional concessions. Be sure you completely understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to 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 rental contract.
Now it’s time to review the commercial rental contract. It would be advisable 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. Industrial lease language can be negotiated. If you don’t like certain lease items or would like to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the landlord will provide you a copy of the lease to review.
There are several more things to consider when leasing commercial space 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 just 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 lot of money and time.