Before you begin looking for the perfect for your startup company, you will need to get educated about the commercial warehouse leasing process. Being ready will prevent you from making rash decisions and costly mistakes you will regret later on. The following are some insider tips to help make an informed choice when letting a commercial space your company
Start the process of searching commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some sort of improvements which the time required will depend on the scope of work.
Thoroughly examine your company’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get familiar with allthe commercial real estate terms and meanings. Different landlords state 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 property leasing process or the current market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost you anything since building owners pay all the leasing commissions. The landlord agent will have an knowledgable listing agent helping them so it would be a good idea for you to have one also.
Personally visit all the spaces that meet your requirements so you can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions about the ownership, property amenities, required lease term length, how much the landlord is prepared 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 2 to three other choices. These additional options will work to your benefit because you will know what to expect during the lease negotiations and you will gain more leverage with numerous building owners competing for your tenancy. They also give you something to fall back to if the discussions for your first choice go silent.
Send out proposals to your top three to five choices. These are not legally binding. You don’t ever 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 every property. A few of the things you should put into consideration include the size of this space, the asking base rental rates, the necessary lease term, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the pros and cons 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 that are way above 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 spaces need tenant improvements then it’s important that you determine 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 have to pay above and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to go back to every landlord to negotiate extra concessions. Make certain you fully 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 result in you signing a contract your 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 this commercial lease contract.
Now it is time to review the commercial lease contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they can review the lease with you also. Industrial lease language can be negotiated. If you don’t like particular lease items or want to propose new language now is the time to do so.
Once the end of lease contract negotiations has ended the building owner will give you a copy of the lease to sign.
There are many more things to think about 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 just leased 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you will save a lot of time and money.