Before you begin searching for a great warehouse space for rent for your small business, you should to get informed about the commercial property leasing procedure. Being ready should help prevent you from making rash decisions and costly mistakes you will regret later on. The following are some insider suggestions to help make an informed choice when renting a commercial property your business
Initiate the process of searching commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will require some type of improvements 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 property terms and definitions. Various landlords say and quote things differently. If you are in doubt about what they mean don’t be afraid to ask them to get more info.
If you are not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the help of a tenant representative. Their services don’t cost anything because building owners compensate all of the leasing fees. The landlord representative will have an knowledgable listing agent representing them so it would be a good idea for you to have one too.
Physically tour all of the properties that meet your requirements so you can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is acceptable for your requirements: continue looking until you have at least 2 to three alternative choices. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you will gain more leverage with numerous building owners competing for your business. They also give you something to fall back to if the negotiations to your first choice go silent.
Send out proposals to your top three to five choices. These aren’t legally binding. You never want to take a landlord representative’s verbal word. 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 each property. A few of the things you should put into consideration include the size of this space, the asking base rental rates, the required 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 which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial property require tenant improvements then it’s important that you determine what improvements you want on each and get prelim construction bids. This way if the landlord is offering a finish out allowance you will learn how much out of pocket you will have to pay over and beyond what the landlord is prepared 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. Be sure you fully understand the total expenses you are expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might lead to you signing a contract your business can’t live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of this commercial lease contract.
Now it’s time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant representative then they can review the lease with you also. Industrial 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 lease contract negotiations has finished the landlord will give you a copy of the lease to review and sign.
There are many more things to consider when leasing commercial property however these suggestions will help get you started. If you are a new business leasing space for the first time or an existing business who has only leased 1 or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a lot of money and time.