Before you begin searching for a great warehouse space for rent for your startup, you should to get educated about the commercial real estate leasing procedure. Being ready should help prevent you from making rash decisions and costly mistakes thatyou will regret in the future. Below are some insider tips to help make an informed choice when leasing a commercial real estate your business
Start the process of locating commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Finding the perfect space and negotiating the deal will take 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will need some sort of changes which the time required will depend on the scope of work.
completely research your business’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get acquainted with the commercial real estate terms and meanings. Various landlords say and quote things otherwise. If you are unsure about what they mean don’t be afraid to ask them to supply more info.
If you are not knowledgeable about the commercial real estate leasing process or the current market conditions then consider engaging the assistance of a tenant rep. Their services don’t cost anything because landlords pay all of the leasing fees. The landlord agent will have an experienced listing agent representing them so it would be a good idea for you to have one too.
Personally see all of the properties that meet your requirements so thatyou can make a short list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions about who owns the property, 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 space you think is suitable for your requirements: continue searching until you have at least two to three other options. These additional options will work to your advantage because you will know what to expect throughout 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 whether the discussions for your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You never want to take a landlord agent’s verbal word. Everything needs to 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. Some of the things you need to put into consideration include the size of the space, the inquiring base rental rates, the required lease term, and the incremental costs (taxes, insurance, maintenance, etc). You can also 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 that 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 properties need tenant finish-outs then it’s crucial that you determine what changes you want on each and get bids from contractors. That way if the landlord is offering a tenant improvement allowance you will know 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 is logical to go back to each landlord to negotiate additional concessions. Be certain 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 thatyour business cannot live up to.
After discussions are finalized and you have made your selection now it is time to have the landlord offer you the first draft of the commercial lease contract.
Now it is 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 agent then they could review the lease with you also. Industrial lease language could 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 copy of the lease to review.
There are several more things to consider when renting commercial real estate however these tips will help get you started. If you are a new company renting commercial 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 don’t cost you anything and you will save a great deal of money and time.