Before you start looking for a great warehouse space for rent for your startup, you must to get educated about the commercial property leasing procedure. Being ready should prevent you from making foolish decisions and costly mistakes you will come to regret in the future. Below are some insider suggestions to help make an informed decision when renting a commercial space your business
Initiate the process of locating commercial space at least 6-12 months before your current lease expires or until your ideal move-in-date. Locating the right space and negotiating the deal alonewill require 1-2 months depending upon the size area and current market conditions. In most cases the spaces you like will require some sort of tenant improvements which the time needed will depend on the scope of work.
Thoroughly examine your company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with allthe commercial space terms and definitions. Different landlords state and quote things differently. If you’re in doubt about what they mean don’t be afraid to ask them to provide more info.
If you’re not familiar with the commercial real estate leasing process or the current market conditions then consider engaging the support of a tenant rep. Their services don’t cost anything since building owners pay all of the leasing fees. The landlord agent will have an knowledgable listing agent advising them so it would be a great idea for you to have one as well.
Physically see all of the properties that meet your requirements so you can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord reps 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 space you think is suitable for your requirements: continue searching until you have at least two to 3 other choices. 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 whether 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 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 each property. Some of the things you should put into consideration include the size of this space, the inquiring foundation 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’re 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 above your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate and any operating expenses then dividing by 12.
If any of the commercial spaces require tenant improvements then it is 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’ll have to pay above and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to go back to each landlord to negotiate extra concessions. Be certain you fully understand the total expenses you’re expected to cover. Don’t get emotionally attached to a specific 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 have made your selection now it’s time to have the landlord offer you the first draft of this 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. For those who have a tenant agent 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 now is the time to do so.
When the end of lease contract negotiations has ended the landlord will give you a copy of the lease to sign.
There are many more things to think about when renting commercial space however these ideas will help get you going. If you’re a new company renting commercial property for the first time or an current company who has just leased 1 or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a lot of time and money.