Before you begin searching for an excellent warehouse space for rent for your company, you should to get informed about the commercial real estate leasing process. Being ready should keep you from making expeditious decisions and costly mistakes you will end up regretting in the future. Below are some insider tips to help make an informed choice when renting a commercial space your company
Initiate the process of locating commercial space at least 6-12 months before your current lease expires or until your ideal move-in-date. Locating the correct space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. Typically the spaces you like will require some sort of changes that the time needed will depend on the scope of work.
Thoroughly research your company’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with the commercial space terms and definitions. Different landlords state and quote things otherwise. If you’re unsure about what they mean do not be afraid to ask them to provide more information.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the help of a tenant agent. Their services do not cost you anything since landlords pay all of the rental fees. The landlord rep will have an expert listing agent helping them so it would be a good idea for you to have one as well.
Physically see all of the properties that meet your needs so you can make a brief 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 about the ownership, property amenities, required lease duration, how much the landlord is willing to give in tenant improvement allowances, etc..
Do not settle for the first commercial properties you believe is suitable for your needs: continue looking until you have at least two to three alternative choices. These additional options will work to your advantage because you will know what to expect during 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 negotiations for your first choice go sideways.
Send out proposals to your top three to five choices. These aren’t 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 most suitable for your company, prepare a spreadsheet to do an apples to apples comparison of each property. Some of the things you should put into consideration include the size of this distance, the asking base rental rates, the necessary 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’re budget conscious then you can quickly narrow down the list by calculating the monthly base rents for each property then removing those which are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If any of the commercial buildings require tenant improvements then it is crucial that you determine what improvements you want on each and get construction bids. That way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you’ll need to pay over and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to go back to each landlord to negotiate extra concessions. Be sure you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After negotiations are finalized and you’ve made your selection now it is time to have the landlord offer you the first draft of this commercial rental contract.
Now it is 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 representative 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 would like to propose new language today is the time to do so.
Once the end of rental contract negotiations has finished the landlord will provide you a draft 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 started. If you’re a new company leasing commercial space for the first time or an current company who has only rented one or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a great deal of time and money.
