Before you start looking for a good warehouse space for rent for your startup company, you will need to get informed about the commercial real estate leasing process. Being ready will keep you from making impulsive decisions and costly mistakes you will regret later on. The following are some insider suggestions to help make an informed choice when letting a commercial warehouse space your business
Start the process of searching for commercial space at least 6-12 months before your existing lease expires or before your perfect move-in-date. Locating the perfect 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 type of improvements which the time needed will depend on the scope of work.
Thoroughly analyze your company’s present 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. Different landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to supply 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 rep. Their services do not cost you anything because building owners compensate all of the rental commissions. The landlord rep will have an expert listing agent advising them so it would be a great idea for you to have one as well.
Personally tour all of the properties that meet your requirements so you can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Don’t settle for the first commercial properties you think is suitable for your requirements: continue searching until you have at least two to 3 alternative options. These additional 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 building owners competing for your company. They also give you something to fall back to whether the negotiations to your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You never need to take a landlord agent’s verbal word. 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 each property. Some of the things you should put into consideration include the size of the distance, the asking foundation rental rates, the necessary lease duration, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to 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 over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenses 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 learn just how much out of pocket you will need 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 go back to each landlord to negotiate additional concessions. Be sure you completely understand the total expenses you are 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 your business cannot live up to.
After negotiations are finalized and you’ve made your selection now it is time to have the landlord provide 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. For those who have a tenant agent 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 want to propose new language today is the time to do so.
Once the end of lease contract negotiations has finished the landlord will supply you a copy of the lease to sign.
There are several more things to think about when leasing commercial real estate however these suggestions will help get you started. If you are a new business leasing commercial space for the first time or an existing business who has only rented one or two spaces then consider getting help from a tenant rep. Their services do not cost you anything and you will save a lot of time and money.
