Before you start searching for an excellent warehouse space for rent for your small business, you need to get educated about the commercial real estate leasing procedure. Being prepared should help prevent you from making hasty decisions and costly mistakes thatyou will regret in the future. Below are some insider tips to help make an informed choice when letting a commercial warehouse space your business
Start the process of hunting for commercial space at least 6-12 months before your current lease expires or until your perfect move-in-date. Locating the perfect space and negotiating the deal alonewill 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 needed will depend on the scope of work.
completely examine your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with the commercial real estate terms and meanings. Different landlords say and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to get more info.
If you are not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost anything since landlords pay all of the rental fees. The landlord representative will have an knowledgable listing agent helping them so it would be a good idea for you to have one too.
Physically see all of the properties that meet your requirements so thatyou can make a short list. Keep 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 duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your requirements: continue searching until you have at least two to 3 alternative choices. These extra options will work to your advantage because you will know what to expect during the lease negotiations and you will gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to whether the discussions to your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You never need to have a landlord agent’s verbal word. 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 each property. A few of the things you need to consider include the dimensions of this space, 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 are budget conscious then you can quickly narrow down the list by simply 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 property need improvements then it is important that you determine what improvements you want on each and get prelim construction bids. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you will need to pay over and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate extra concessions. Be 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 can’t live up to.
After discussions 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. For those who have a tenant representative then they can review the lease with you also. Industrial lease language can be negotiated. If you don’t like certain 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 landlord will give you a copy of the lease to sign.
There are many more things to consider when leasing commercial real estate however these tips will help get you started. If you are a new business leasing commercial property for the first time or an current business who has just rented one or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you will save a great deal of money and time.
