Before you start looking for a good warehouse space for rent for your business, you need to get informed about the commercial real estate leasing process. Being ready should keep you from making hurried decisions and costly mistakes you will come to regret in the future. The following are some insider tips to help make an informed decision when letting a commercial property your business
Initiate the process of finding commercial real estate for lease at least 6-12 months before your current lease terminates or before your ideal move-in-date. Locating the perfect space and negotiating the deal alonewill take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some type of improvements that the time needed will depend on the scope of work.
completely analyze your business’s current and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with allthe commercial property terms and meanings. Various landlords state and quote things otherwise. If you’re in doubt about what they mean don’t be afraid to ask them to supply more information.
If you’re not familiar with the commercial real estate leasing process or the current market conditions then consider engaging the assistance of a tenant representative. Their services don’t cost anything because building owners pay all of the leasing commissions. The landlord representative will have an professional listing agent representing them so it would be a good idea for you to have one also.
Personally 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 agents 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..
Do not settle for the first commercial space you believe is suitable for your requirements: continue searching until you have at least 2 to 3 alternative choices. These additional options will work to your advantage because you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous building owners competing for your business. 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 choices. These are not legally binding. You never want to take 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. Some of the things you should put into consideration include the size of this distance, the inquiring base rental rates, the necessary lease term, and the incremental costs (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 eliminating those that are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If any of the commercial properties need tenant finish-outs then it’s important that you figure out what changes you want on each and get bids from contractors. That way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you’ll 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 is logical to go back to every landlord to negotiate additional concessions. Be sure you completely understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain 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 is time to have the landlord provide you the first draft of this commercial rental contract.
Now it is 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 can review the lease with you also. Commercial 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 provide you a copy of the lease to sign.
There are many more things to consider when leasing commercial real estate however these tips will help get you started. If you’re a new company leasing commercial space for the first time or an current company who has only rented one 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 money and time.