Ultimate Guide To Leasing Industrial Warehouse Real Estate
Before you begin looking for a great for your business, you need to get informed about the commercial real estate leasing procedure. Being ready will prevent you from making expeditious decisions and costly mistakes you will come to regret later on. Below are some insider tips to help make an informed decision when letting a commercial warehouse space your company
Initiate the process of hunting commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some type of improvements which the time needed will depend on the scope of work.
completely research your business’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with allthe commercial property terms and definitions. Various landlords say and quote things otherwise. If you’re in doubt about what they mean do not be afraid to ask them to provide more information.
If you’re not familiar with the commercial property leasing process or the current market conditions then consider engaging the help of a tenant agent. Their services do not cost anything because building owners pay all the rental fees. The landlord rep will have an knowledgable listing agent representing them so it would be a great idea for you to have one also.
Personally see all the spaces that meet your needs so you can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions regarding the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial space you believe is suitable for your needs: continue looking until you have at least 2 to three alternative choices. These extra options will work to your advantage because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous building owners competing for your company. They also give you something to fall back to whether the discussions for your first choice go silent.
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 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 every property. A few of the things you should put into consideration include the size of this distance, the asking base rental rates, the necessary lease duration, and the incremental costs (taxes, insurance, maintenance, etc). You can also take note about the pros and cons 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 above your budget. The monthly base rent is calculated by multiplying the industrial space square feet from 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. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you’ll have to pay above and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate extra concessions. Be certain you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a specific 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 have 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 review 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 also. Commercial 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.
When the end of rental contract negotiations has finished the landlord will supply you a copy of the lease to review and sign.
There are several more things to consider when renting commercial real estate however these ideas will help get you going. If you’re a new business renting commercial property for the first time or an existing business who has just leased one 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 time and money.