Before you begin searching for a good for your business, you will need to get educated about the commercial warehouse leasing procedure. Being ready should help prevent you from making hasty decisions and costly mistakes you will end up regretting later on. Below are some insider suggestions to help make an informed decision when leasing a commercial warehouse space your business
Initiate the process of searching commercial space at least 6-12 months before your current lease expires or before your perfect move-in-date. Finding the correct space and negotiating the deal alonewill take 1-2 months depending upon the size space and current market conditions. In most cases the spaces you like will need some type of improvements that the time required will depend on the scope of work.
Thoroughly analyze your company’s current and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with allthe commercial space terms and meanings. Different landlords say and quote things differently. If you are in doubt about what they mean do not be afraid to ask them to get more info.
If you are not knowledgeable about the commercial real estate leasing process or the current market conditions then consider engaging the assistance of a tenant representative. Their services do not cost anything since building owners pay all of the leasing fees. The landlord rep will have an knowledgable listing agent advising them so it would be a good idea for you to have one also.
Personally visit all of the spaces that meet your requirements so you can make a short list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a great deal of questions regarding who owns the property, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial space you think is acceptable for your requirements: continue searching until you have at least two to three other choices. These additional options will work to your benefit since you will know what to expect during the lease negotiations and you will 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 choices. These are not legally binding. You never need to have a landlord agent’s verbal note. 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 each property. A few of the things you need to put into consideration include the size of the space, the asking foundation rental rates, the required 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 simply 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 commercial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial buildings need tenant improvements then it is crucial that you determine what changes you want on each and get construction bids. That way if the landlord is offering a tenant improvement allowance you will know 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 each landlord to negotiate additional concessions. Make sure 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 lead to you signing a contract your business cannot live up to.
After negotiations 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 advisable for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you also. Industrial 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.
When the end of lease contract negotiations has finished the landlord will provide you a draft of the lease to review and sign.
There are several more things to think about when leasing commercial space however these ideas 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 two spaces then consider getting help from a tenant rep. Their services do not cost you anything and you will save a great deal of money and time.