Before you begin searching for the perfect warehouse space for rent for your startup company, you must to get educated about the commercial real estate leasing procedure. Being ready should help prevent 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 decision when renting a commercial warehouse space your company
Start the process of hunting commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some type of improvements which the time required will depend on the scope of work.
Thoroughly analyze your business’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with the commercial real estate terms and definitions. Different landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to supply more info.
If you are not familiar with the commercial rental process or the current market conditions then consider engaging the help of a tenant rep. Their services do not cost you anything since landlords compensate all of the leasing fees. The landlord rep will have an experienced listing agent representing them so it would be a great idea for you to have one as well.
Personally see all of the spaces that meet your requirements so thatyou can make a short list. Keep in mind that the layouts 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 duration, how much the landlord is prepared to give in tenant construction allowances, etc..
Don’t settle for the first commercial space you think is suitable for your requirements: continue looking until you have at least 2 to three alternative choices. These extra options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords competing for your business. 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 choices. These aren’t legally binding. You never want 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 business, prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you should consider include the size of this space, the asking foundation rental rates, the necessary lease duration, 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 calculating the monthly base rents for each property then eliminating those that are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate and any operating expenses then dividing by 12.
If some of the commercial buildings need tenant finish-outs then it’s crucial that you figure out what improvements you want on each and get construction bids. This way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you’ll need to pay above and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate extra concessions. Make certain you fully understand the total expenses you are expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business cannot 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 this commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant agent then they could review the lease with you as well. Industrial lease language could be negotiated. If you do not like certain lease items or want to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the building owner will provide you a draft of the lease to sign.
There are many more things to consider when leasing commercial property however these suggestions will help get you started. If you are a new business leasing commercial property for the first time or an existing business who has only rented 1 or 2 spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a lot of money and time.