Before you start looking for a good warehouse space for rent for your small business, you will need to get educated about the commercial real estate leasing procedure. Being ready should prevent you from making foolish decisions and costly mistakes thatyou will end up regretting in the future. Below are some insider tips to help make an informed choice when leasing a commercial real estate your company
Start the process of hunting for commercial rental space at least 6-12 months before your current lease terminates or before your ideal move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending on the size area and current market conditions. Typically the spaces you like will require some sort of changes that the time required will depend on the scope of work.
completely examine your business’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with the commercial real estate terms and definitions. Various landlords state and quote things otherwise. If you are in doubt about what they mean do not be afraid to ask them to provide more info.
If you are not knowledgeable about the commercial rental process or the present market conditions then consider engaging the support of a tenant representative. Their services do not cost anything because landlords pay all the rental fees. The landlord rep will have an knowledgable listing agent helping them so it would be a good idea for you to have one as well.
Physically tour all the spaces that meet your requirements so thatyou can make a short list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions about who owns the property, property amenities, required lease term length, 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 looking until you have at least two to 3 alternative options. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords competing for your business. 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 options. These are not legally binding. You never need to take a landlord agent’s verbal note. 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 every property. Some of the things you should consider include the size of this distance, the inquiring foundation rental rates, the necessary lease duration, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to 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 and any operating expenditures then dividing by 12.
If some of the commercial properties require reconfiguring then it’s important that you figure out what changes you want on each and get preliminary bids. That way if the landlord is offering a construction allowance you will know just how much out of pocket you’ll have to pay above and beyond what the landlord is prepared to give.
Carefully examine 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 result in you signing a contract thatyour business can’t live up to.
After discussions are finalized and you have made your selection now it is time to have the landlord provide you the first draft of this commercial lease contract.
Now it is time to reassess 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 could review the lease with you also. Industrial lease language could be negotiated. If you do not like particular lease items or want to propose new language now is the time to do so.
Once the end of lease contract negotiations has finished the landlord will give you a draft of the lease to review.
There are many more things to think about when leasing commercial real estate however these ideas will help get you started. If you are a new business leasing commercial space for the first time or an current business who has only leased 1 or two spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a great deal of money and time.