Before you start looking for a great warehouse space for your small company,you need to get informed about the commercial real estate leasing procedure. Being prepared 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 renting a commercial property your business.
Initiate the process of searching for commercial space at least 6-12 months before your current lease terminates or before your perfect move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some sort of modifications which the time required 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 familiar with allthe commercial property terms and definitions. Different landlords say and quote things otherwise. If you are unsure about what they mean don’t be afraid to ask them to get more information.
If you are not familiar with the commercial property leasing process or the present market conditions then consider engaging the help of a tenant rep. Their services don’t cost anything because building owners pay all the rental fees. 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. Bear 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 prepared to give in tenant construction allowances,etc..
Do not settle for the first commercial space you believe is suitable for your needs: continue looking until you have at least 2 to three other choices. These extra options will work to your advantage because you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple building owners competing for your tenancy. They also give you something to fall back to whether the discussions for your first choice go silent.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever 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 company,prepare a spreadsheet to do an apples to apples comparison of every property. Some of the things you should consider include the dimensions of this space,the inquiring base rental rates,the necessary lease term,and the incremental expenses (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 removing 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 properties need improvements then it’s important that you determine what changes you want on each and get construction bids. This way if the landlord is offering a construction allowance you will learn just how much out of pocket you’ll have to pay over and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to go back to every landlord to negotiate additional concessions. Make certain you fully understand the total expenses you are expected to cover. Do not 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’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 wise for you to hire an attorney to review the lease. If you have a tenant agent then they could review the lease with you as well. Industrial lease language could be negotiated. If you don’t 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 landlord will provide you a draft of the lease to review and sign.
There are several more things to consider when leasing commercial property however these suggestions will help get you started. If you are a new company leasing 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 do not cost you anything and you’ll save a great deal of money and time.