The Right Way To Lease Industrial Warehouse Real EstateThe Right Way To Lease Industrial Warehouse Real Estate
Before you start searching for an excellent warehouse space for rent for your business, you need to get informed about the commercial warehouse leasing process. Being prepared will keep you from making rapid decisions and costly mistakes you will probably regret in the future. Below are some insider tips to help make an informed choice when renting a commercial real estate your company
Initiate the process of searching for commercial space 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 alonewill require 1-2 months depending upon the size area and current market conditions. In most cases the spaces you like will require some type of modifications which the time required will depend on the scope of work.
Thoroughly analyze your company’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with the commercial space terms and meanings. Different landlords say and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to provide more info.
If you’re not familiar with the commercial property leasing process or the present market conditions then consider engaging the help of a tenant agent. Their services don’t cost anything since building owners compensate all of the rental commissions. The landlord rep will have an experienced listing agent representing them so it would be a good idea for you to have one as well.
Personally see all of the spaces that meet your needs so you 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 great deal of questions about the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant construction allowances, etc..
Don’t 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 advantage because 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 whether the discussions for your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever want to take a landlord agent’s verbal note. Everything needs to be in writing.
To help you decide what property is most suitable for your business, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you should put into consideration include the size of this space, the asking base rental rates, the necessary lease term, and the incremental costs (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 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 by the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial spaces require tenant improvements then it’s important that you determine what changes you want on each and get construction bids. That way if the building owner is offering a finish out allowance you will learn just how much out of pocket you’ll have to pay over and beyond what the building owner 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 additional concessions. Make certain you completely 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 lead to you signing a contract your business cannot live up to.
After discussions are finalized and you’ve 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 review the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. If you 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 now is the time to do so.
When the end of rental contract negotiations has ended the building owner will give you a copy of the lease to review.
There are several more things to think about when renting commercial space however these ideas will help get you going. If you’re a new business renting space for the first time or an current business who has just leased one or 2 spaces then consider getting help from a tenant rep. Their services do not cost you anything and you’ll save a lot of time and money.