Before you start searching for a great warehouse space for rent for your startup company, you must to get educated about the commercial space leasing procedure. Being ready will keep you from making hasty decisions and costly mistakes thatyou will end up regretting in the future. The following are some insider tips to help make an informed choice when letting a commercial warehouse space your company
Initiate the process of searching commercial space at least 6-12 months before your existing lease expires or until your ideal move-in-date. Finding the right space and negotiating the deal alonewill require 1-2 months depending on the size area and current market conditions. Typically the spaces you like will require some sort of improvements that the time required will depend on the scope of work.
Thoroughly examine your company’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial space terms and definitions. Various landlords say and quote things differently. If you are in doubt about what they mean do not be afraid to ask them to provide more information.
If you are not familiar with the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant agent. Their services do not cost anything because building owners compensate all the rental fees. The landlord agent will have an experienced listing agent helping them so it would be a great idea for you to have one also.
Personally visit all the spaces that meet your needs so thatyou can make a short list. Keep 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 duration, how much the landlord is willing to give in tenant improvement allowances, etc..
Do not settle for the first commercial space you believe is suitable for your needs: continue looking until you have at least two to 3 other options. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple building owners competing for your business. They also give you something to fall back to if the negotiations to your first choice go silent.
Send out proposals to your top three to five options. These are not legally binding. You never need to have a landlord representative’s verbal note. Everything needs to 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 need to put into consideration include the size of the space, the asking base rental rates, the required lease duration, 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 calculating the monthly base rents for each property then eliminating those which are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces require tenant improvements then it is important that you figure out what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you’ll need to pay above 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. Make certain you completely understand the total expenses you are expected to cover. Do not get emotionally attached to a specific 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 have made your selection now it is time to have the landlord provide you the first draft of the commercial rental contract.
Now it is time to review the commercial rental contract. It would be wise for you to hire an attorney to review the lease. For those who have a tenant representative then they could review the lease with you as well. Commercial lease language could be negotiated. If you do not like certain lease items or would like to propose new language now is the time to do so.
Once the end of rental contract negotiations has ended the landlord will provide you a draft of the lease to sign.
There are many more things to think about when leasing commercial space however these tips will help get you started. If you are a new company leasing commercial property for the first time or an existing company who has just leased one or two spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a great deal of time and money.