Before you begin searching for a great for your company, you should to get educated about the commercial warehouse leasing procedure. Being prepared will prevent you from making impulsive decisions and costly mistakes you will probably regret later on. The following are some insider suggestions to help make an informed decision when letting a commercial real estate your company
Initiate the process of locating commercial space at least 6-12 months before your existing lease terminates or until your perfect move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. Typically the spaces you like will require some sort of modifications that the time required will depend on the scope of work.
completely analyze your company’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with the commercial property terms and definitions. Different landlords say and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to supply more information.
If you are not knowledgeable about the commercial leasing process or the current market conditions then consider engaging the assistance of a tenant rep. Their services don’t cost you anything since building owners compensate all the leasing commissions. The landlord agent will have an expert listing agent advising them so it would be a good idea for you to have one too.
Physically tour all the spaces that meet your needs so you can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions regarding the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Don’t settle for the first commercial space you think is suitable for your needs: continue searching until you have at least two to 3 alternative choices. 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 numerous 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 choices. These aren’t legally binding. You don’t ever 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 every property. A few of the things you need to put into consideration include the dimensions of this distance, the inquiring foundation rental rates, the required lease duration, and the incremental costs (taxes, insurance, maintenance, etc). You can also take note about the pros and cons 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 that are way over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces require reconfiguring then it’s important that you determine what changes you want on each and get prelim construction bids. That way if the building owner is offering a finish out allowance you will know just how much out of pocket you will need to pay over and beyond what the building owner is prepared to give.
Carefully analyze 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 are expected to cover. Don’t get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract your business cannot live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord offer you the first draft of this commercial lease contract.
Now it is time to reassess the commercial lease contract. It would be wise for you to hire an attorney to review the lease. For those who have a tenant agent 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 would like to propose new language now is the time to do so.
Once the end of lease contract negotiations has finished the building owner will provide you a copy of the lease to review and sign.
There are many more things to think about when renting commercial real estate however these tips will help get you going. If you are a new business renting commercial space for the first time or an existing business who has only rented 1 or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you will save a lot of money and time.