Before you begin searching for the perfect warehouse space for your company, you will need to get educated about the commercial warehouse leasing procedure. Being prepared will keep you from making foolish decisions and costly mistakes you will come to regret later on. Below are some insider suggestions to help make an informed choice when leasing a commercial warehouse space your company
Initiate the process of searching for commercial space at least 6-12 months before your existing lease terminates or before your ideal move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will require some sort of improvements that the time needed will depend on the scope of work.
completely research your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial property terms and meanings. Different landlords say and quote things differently. If you are in doubt about what they mean do not be afraid to ask them to supply more information.
If you are not knowledgeable about the commercial property leasing process or the present market conditions then consider engaging the assistance of a tenant agent. Their services do not cost anything since landlords pay all the leasing fees. The landlord representative will have an knowledgable listing agent helping them so it would be a great idea for you to have one too.
Physically visit all the properties that meet your requirements so you can make a short list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps a great deal of questions regarding the ownership, 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 space you think is acceptable for your requirements: continue looking until you have at least two to 3 alternative choices. These additional options will work to your advantage since you will know what to expect throughout the lease negotiations and you will gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to if the discussions to your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You never want to have a landlord agent’s verbal note. Everything should 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. Some of the things you need to put into consideration include the dimensions of this space, the inquiring foundation rental rates, the necessary lease duration, and the incremental costs (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 that are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial properties require improvements then it is important that you determine what improvements you want on each and get prelim construction bids. This way if the building owner is offering a tenant improvement allowance you will know just how much out of pocket you will have to pay above and beyond what the building owner is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to every landlord to negotiate extra concessions. Make 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’s time to have the landlord provide you the first draft of this commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative then they can review the lease with you as well. Commercial lease language can be negotiated. If you do not like particular lease items or would like to propose new language now is the time to do so.
When the end of rental contract negotiations has ended the building owner will give you a draft of the lease to review and sign.
There are several more things to think about when renting commercial property however these tips will help get you started. If you are a new business renting commercial property for the first time or an existing business who has only leased 1 or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you will save a great deal of money and time.