Before you start looking for a great warehouse space for rent for your small business, you should to get educated about the commercial space leasing process. Being prepared should help prevent you from making rash decisions and costly mistakes thatyou will end up regretting in the future. Below are some insider suggestions to help make an informed choice when letting a commercial real estate your business
Start the process of searching for commercial space at least 6-12 months before your existing lease terminates or before your perfect move-in-date. Finding the perfect space and negotiating the deal will take 1-2 months depending on the size space and current market conditions. Typically the spaces you like will require some type of changes that the time needed will depend on the scope of work.
completely examine your company’s current and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with allthe commercial space terms and meanings. Various landlords state and quote things differently. If you are unsure about what they mean don’t be afraid to ask them to supply more information.
If you are not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the support of a tenant representative. Their services don’t cost anything because building owners compensate all of the rental fees. 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 see all of the properties that meet your needs so thatyou can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions regarding the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial properties you think is acceptable for your needs: continue looking until you have at least two to three alternative options. These extra options will work to your advantage since you will know what to expect during the lease negotiations and you will gain more leverage with multiple building owners competing for your business. They also give you something to fall back to if the discussions for your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You never need to take a landlord representative’s verbal word. Everything needs to be in writing.
To help you decide what property is best suited for your business, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you need to consider include the dimensions of this space, the asking foundation rental rates, the necessary lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons 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 which are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial buildings require tenant finish-outs then it is crucial that you determine what changes you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will 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 return to each landlord to negotiate extra concessions. Make sure you fully understand the total expenses you are 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 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 rental contract.
Now it is time to review the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you as well. Industrial lease language could be negotiated. If you don’t like particular lease items or want 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 draft of the lease to review.
There are many more things to think about when leasing commercial real estate however these tips will help get you started. If you are a new business leasing commercial property for the first time or an existing business who has just leased 1 or two spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a great deal of money and time.