Before you start searching for the perfect warehouse space for your company, you should to get informed about the commercial warehouse leasing process. Being ready should keep you from making impulsive decisions and costly mistakes you will come to regret later on. Below are some insider suggestions to help make an informed decision when leasing a commercial real estate 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 correct space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. Typically the spaces you like will require some type of improvements that the time required will depend on the scope of work.
Thoroughly research your business’s present 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. Different landlords state and quote things differently. If you’re unsure about what they mean don’t be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the support of a tenant representative. Their services don’t cost you anything since landlords compensate all of the rental fees. The landlord agent will have an expert listing agent helping them so it would be a good idea for you to have one as well.
Personally visit all of the spaces that meet your requirements so you can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions regarding 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 space you believe is acceptable for your requirements: continue searching until you have at least two to 3 alternative options. These extra options will work to your benefit because you will know what to expect during the lease negotiations and you will gain more leverage with multiple landlords competing for your tenancy. They also give you something to fall back to if the discussions to your first choice go sideways.
Send out proposals to your top three to five options. These are not legally binding. You don’t ever want to take a landlord agent’s verbal word. 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 should put into consideration include the dimensions of this space, the inquiring base rental rates, the necessary 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’re budget conscious then you can quickly narrow down the list by simply 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 commercial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces require tenant improvements then it is critical that you figure out what improvements you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will 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 is logical to go back to each landlord to negotiate extra concessions. Make sure you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain 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 lease contract.
Now it’s time to review the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent then they can review the lease with you also. Industrial lease language can 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 lease contract negotiations has ended the building owner will provide you a draft of the lease to review and sign.
There are many more things to think about when leasing commercial real estate however these ideas will help get you going. If you’re a new company leasing space for the first time or an current company who has just leased 1 or two spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you will save a great deal of money and time.