Before you start looking for the perfect warehouse space for rent for your startup, you must to get educated about the commercial property leasing procedure. Being prepared will keep you from making rapid decisions and costly mistakes you will regret in the future. Below are some insider suggestions to help make an informed choice when leasing a commercial property your company
Start the process of searching commercial space at least 6-12 months before your current lease expires or before your ideal move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will require some sort of improvements which the time required will depend on the scope of work.
Thoroughly examine your company’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with the commercial space terms and definitions. Various landlords say and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to provide more info.
If you are not knowledgeable about the commercial leasing process or the current market conditions then consider engaging the support of a tenant agent. Their services don’t cost you anything because landlords pay all of the rental fees. The landlord representative will have an professional listing agent representing them so it would be a great idea for you to have one too.
Physically visit all of the properties that meet your requirements so you can make a short list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions about the ownership, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Don’t settle for the first commercial properties you think is suitable for your requirements: continue searching until you have at least 2 to three other options. These additional 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 business. They also give you something to fall back to if the discussions to your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever want to have a landlord representative’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 should put into consideration include the dimensions of the space, the inquiring base rental rates, the required lease duration, and the incremental expenses (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 that 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 expenditures then dividing by 12.
If some of the commercial property require changes then it’s important that you determine what improvements you want on each and get prelim construction bids. That way if the building owner is offering a tenant improvement allowance you will learn just how much out of pocket you will need to pay above and beyond what the building owner is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to go back to every landlord to negotiate additional concessions. Be sure 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 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 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. If you have a tenant agent then they can review the lease with you as well. Industrial lease language can be negotiated. If you don’t like certain lease items or would like to propose new language now is the time to do so.
Once the end of rental contract negotiations has ended the building owner will give you a copy of the lease to sign.
There are many more things to consider when renting commercial real estate however these tips will help get you going. If you are a new company renting space for the first time or an current company who has just leased 1 or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a great deal of money and time.