Before you begin looking for an excellent warehouse space for your startup, you need to get educated about the commercial real estate leasing procedure. Being ready will help prevent you from making rapid decisions and costly mistakes thatyou will end up regretting in the future. Below are some insider tips to help make an informed decision when letting a commercial warehouse space your company
Start the process of hunting commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending upon the size area and current market conditions. In most cases the spaces you like will need some sort of improvements that the time required will depend on the scope of work.
Thoroughly 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 space terms and definitions. Various landlords state and quote things differently. If you’re unsure about what they mean do not be afraid to ask them to get more information.
If you’re not knowledgeable about the commercial real estate leasing process or the current market conditions then consider engaging the help of a tenant agent. Their services do not cost anything because landlords pay all the rental fees. The landlord agent will have an knowledgable listing agent advising them so it would be a great idea for you to have one too.
Personally tour all the properties 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 great deal of questions about the ownership, 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 extra options will work to your advantage because you will know what to expect during the lease negotiations and you will gain more leverage with numerous landlords competing for your company. They also give you something to fall back to if the negotiations for your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever need to have a landlord agent’s verbal note. Everything should be in writing.
To help you decide what property is most suitable for your company, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you should consider include the size of this space, the inquiring base rental rates, the required lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the advantages and disadvantages 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 removing those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces need finish out then it’s important that you figure out what improvements you want on each and get preliminary bids. This way if the landlord is offering a finish out allowance you will learn just how much out of pocket you will need to pay over 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 each landlord to negotiate extra concessions. Make certain you completely understand the total expenses you’re expected to cover. Don’t get emotionally attached to a certain property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord provide you the first draft of this commercial lease contract.
Now it’s time to review 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 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 supply you a draft of the lease to sign.
There are several more things to consider when renting commercial real estate however these ideas will help get you going. If you’re a new company renting space for the first time or an existing company who has only leased one 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 time and money.