Before you start searching for the perfect warehouse space for your business, you need to get informed about the commercial property leasing procedure. Being ready will help prevent you from making foolish decisions and costly mistakes thatyou will end up regretting in the future. Below are some insider tips to help make an informed choice when renting a commercial space your company
Initiate the process of hunting commercial space at least 6-12 months before your existing lease expires or before your ideal move-in-date. Finding the correct 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 which the time needed will depend on the scope of work.
completely analyze your business’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with allthe commercial property terms and meanings. Various landlords say and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to supply more info.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the support of a tenant agent. Their services don’t cost anything since building owners compensate all of the rental commissions. The landlord agent will have an expert listing agent representing 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 thatyou can make a brief list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions regarding who owns the property, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your requirements: continue searching until you have at least 2 to 3 other options. These extra options will work to your benefit because you will know what to expect throughout the lease negotiations and you’ll gain more leverage with numerous building owners competing for your business. 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 options. These aren’t legally binding. You never want to take a landlord representative’s verbal word. Everything needs to 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 consider include the size of the space, the inquiring foundation rental rates, the necessary 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’re budget conscious then you can quickly narrow down the list by 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 commercial space square feet by the asking base rate plus any operating expenditures then dividing by 12.
If some of the commercial spaces require tenant finish-outs then it is important that you figure out what improvements you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you’ll have to pay over and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate extra concessions. Be sure you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After discussions are finalized and you have made your selection now it’s time to have the landlord offer you the first draft of the commercial lease contract.
Now it’s time to review the commercial lease 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 also. Industrial lease language could be negotiated. If you don’t like certain lease items or want to propose new language today is the time to do so.
When the end of lease 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 space however these ideas will help get you going. If you’re a new business renting commercial space for the first time or an existing business who has only rented one or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a lot of time and money.