Complete Guide To Leasing Industrial Warehouse Real Estate
Before you begin searching for a good for your company, you should to get educated about the commercial real estate leasing procedure. Being ready should help prevent you from making foolish decisions and costly mistakes you will probably regret later on. Below are some insider tips to help make an informed choice when renting a commercial space your company
Initiate the process of searching for commercial warehouse space at least 6-12 months before your current lease terminates or before your perfect move-in-date. Locating the perfect space and negotiating the deal will 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 tenant improvements that the time required will depend on the scope of work.
completely analyze your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with the commercial property terms and meanings. Different landlords say and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to supply more info.
If you’re not familiar with the commercial property leasing process or the present market conditions then consider engaging the support of a tenant agent. Their services don’t cost you anything since landlords compensate all of the leasing fees. The landlord representative will have an experienced listing agent helping them so it would be a good idea for you to have one too.
Personally tour all of the properties that meet your needs so you can make a short list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions about the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Do not settle for the first commercial space you believe is suitable for your needs: continue searching until you have at least 2 to three other choices. These extra options will work to your benefit 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 discussions to your first choice go silent.
Send out proposals to your top three to five choices. These are not legally binding. You never need to have a landlord representative’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. A few of the things you need to consider include the size of this space, the inquiring base rental rates, the required lease term, and the incremental expenses (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 that are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate and any operating expenses then dividing by 12.
If any of the commercial spaces need changes then it’s important that you figure out what improvements you want on each and get prelim construction bids. That way if the building owner is offering a finish out allowance you will learn just how much out of pocket you’ll need to pay over and beyond what the building owner is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate additional concessions. Make certain you fully 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 result in 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 provide you the first draft of this commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable 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 don’t like particular lease items or would like to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the building owner will supply you a copy of the lease to sign.
There are several more things to consider when renting commercial space however these suggestions will help get you started. If you’re a new company renting commercial space for the first time or an current company who has just rented 1 or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you’ll save a lot of time and money.