Before you start looking for a good warehouse space for rent for your small business, you need to get educated about the commercial property leasing process. Being prepared will help prevent you from making foolish decisions and costly mistakes you will end up regretting in the future. Below are some insider tips to help make an informed decision when leasing a commercial warehouse space your business
Start the process of searching for commercial space for lease at least 6-12 months before your current lease terminates or until your ideal move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will require some sort of improvements that the time required will depend on the scope of work.
completely analyze your business’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with the commercial real estate terms and definitions. Different landlords say and quote things differently. If you are in doubt about what they mean do not be afraid to ask them to supply more info.
If you are not familiar with the commercial rental process or the present market conditions then consider engaging the support of a tenant representative. Their services do not cost anything since landlords compensate all of the rental commissions. The landlord agent will have an knowledgable listing agent representing them so it would be a great idea for you to have one as well.
Physically visit all of the properties that meet your requirements so you can make a brief list. Bear in mind that the designs 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 improvement allowances, etc..
Don’t settle for the first commercial space you think is acceptable for your requirements: continue searching until you have at least 2 to 3 other choices. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you will gain more leverage with multiple landlords competing for your company. They also give you something to fall back to whether the discussions to your first choice go silent.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever need to take a landlord agent’s verbal note. Everything should 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. Some of the things you need to consider include the dimensions of the space, the inquiring 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 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 and any operating expenses then dividing by 12.
If any of the commercial property require improvements then it’s important that you figure out what improvements you want on each and get preliminary bids. This way if the landlord is offering a construction allowance you will learn just how much out of pocket you will have to pay over and beyond what the landlord is willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to go back to every landlord to negotiate extra concessions. Be certain you completely 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 your business cannot live up to.
After discussions are finalized and you have made your selection now it is time to have the landlord offer you the first draft of the commercial lease contract.
Now it is time to review the commercial lease contract. It would be advisable 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 as well. Industrial lease language can be negotiated. If you do not like particular lease items or would like to propose new language today is the time to do so.
Once the end of lease contract negotiations has finished the landlord will provide you a draft of the lease to review and sign.
There are several more things to think about when renting commercial real estate however these suggestions will help get you going. If you are a new company renting space for the first time or an current company who has only rented one or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you will save a great deal of time and money.