Before you start looking for a great warehouse space for rent for your small company, you must to get informed about the commercial property leasing procedure. Being prepared will prevent you from making hurried decisions and costly mistakes you will probably regret later on. Below are some insider suggestions to help make an informed decision when letting a commercial real estate your company
Initiate the process of searching commercial space at least 6-12 months before your existing lease expires or until your ideal move-in-date. Finding the right space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. Typically the spaces you like will need some sort of improvements that the time required will depend on the scope of work.
Thoroughly research your business’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with allthe commercial real estate terms and meanings. Various landlords state and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to get more information.
If you are not familiar with the commercial rental process or the current market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost you anything since building owners compensate all of the leasing fees. The landlord agent will have an experienced listing agent helping them so it would be a great idea for you to have one also.
Personally see all of the spaces that meet your requirements 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 reps a great deal of questions regarding the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant construction allowances, etc..
Do not settle for the first commercial space you believe 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 during the lease negotiations and you’ll gain more leverage with multiple building owners competing for your tenancy. They also give you something to fall back to whether the discussions for your first choice go sideways.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever need to have a landlord agent’s verbal note. 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. A few of the things you need to put into consideration include the size of the space, the asking base rental rates, the required lease term, 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 simply calculating the monthly base rents for each property then removing those which are way above 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 any of the commercial spaces need tenant improvements then it’s important that you determine 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 have to pay above 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. Be sure you fully understand the total expenses you are expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract your business can’t live up to.
After discussions 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 wise for you to hire an attorney to review the lease. For those who have a tenant representative then they can review the lease with you also. Commercial 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 building owner will give you a copy of the lease to review and sign.
There are several more things to think about when leasing commercial real estate however these ideas will help get you going. If you are a new company leasing commercial space for the first time or an existing company who has only leased 1 or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of time and money.
