Before you begin looking for a great warehouse space for rent for your small company, you will need to get informed about the commercial space leasing process. Being ready will keep you from making impulsive decisions and costly mistakes thatyou will come to regret in the future. Below are some insider tips to help make an informed choice when renting a commercial property your business
Start the process of hunting for commercial space for lease at least 6-12 months before your current lease terminates or until your ideal move-in-date. Locating the right 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 modifications that the time required will depend on the scope of work.
completely analyze your company’s present 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. Different landlords say and quote things otherwise. If you are in doubt about what they mean don’t be afraid to ask them to provide more information.
If you are not knowledgeable about the commercial real estate leasing process or the present market conditions then consider engaging the support of a tenant rep. Their services don’t cost you anything because building owners pay all the rental commissions. The landlord representative will have an professional listing agent advising them so it would be a great idea for you to have one also.
Personally see all 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 agents a great deal of questions regarding who owns the property, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your needs: continue searching until you have at least 2 to 3 alternative choices. These extra options will work to your benefit since you will know what to expect throughout 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 whether the discussions to your first choice go silent.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever want to take a landlord agent’s verbal note. Everything should 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 each property. A few of the things you should put into consideration include the size of the space, the asking foundation rental rates, the necessary lease duration, and the incremental expenses (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 simply calculating the monthly base rents for each property then removing those that are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial spaces require tenant improvements 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 tenant improvement allowance you will know how much out of pocket you will 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 return to each landlord to negotiate extra concessions. Be certain you fully 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 thatyour business cannot live up to.
After discussions are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of the 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. For those who 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 today is the time to do so.
When the end of lease contract negotiations has finished the landlord will give you a draft of the lease to sign.
There are several more things to think about when renting commercial space however these suggestions will help get you going. If you are a new company renting commercial space for the first time or an current company who has just leased one or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a great deal of time and money.