The Right Way To Search For & Lease Industrial Space
Before you start looking for an excellent Sonoma wine tasting for your business, you need to get informed about the commercial warehouse leasing process. Being prepared should help prevent you from making rapid decisions and costly mistakes you will end up regretting later on. Below are some insider suggestions to help make an informed choice when letting a commercial space your company
Start the process of hunting commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Finding the correct space and negotiating the deal will take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will need some type 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 various department heads for input in addition to some key employees.
Get familiar with allthe commercial space terms and definitions. Different landlords state and quote things otherwise. 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 property leasing process or the present market conditions then consider engaging the help of a tenant agent. Their services don’t cost you anything since building owners pay all the rental commissions. The landlord agent will have an experienced listing agent advising them so it would be a good idea for you to have one too.
Personally visit all the properties that meet your requirements so you can make a brief list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions regarding the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you think is suitable for your requirements: continue looking until you have at least 2 to 3 other choices. These additional options will work to your benefit because you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple building owners competing for your company. 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 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. A few of the things you should consider include the size of this space, the inquiring base rental rates, the required lease duration, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the pros and cons 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 above your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces need tenant finish-outs then it is crucial that you figure out what improvements you want on each and get construction bids. This way if the landlord is offering a tenant improvement allowance you will learn just how much out of pocket you’ll need to pay above and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to each landlord to negotiate additional concessions. Be certain you completely understand the total expenses you’re 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’ve made your selection now it’s time to have the landlord provide you the first draft of this 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 agent then they can review the lease with you also. Commercial 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.
When the end of lease contract negotiations has finished 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 property however these suggestions will help get you going. If you’re a new company renting commercial space for the first time or an existing company who has only rented 1 or 2 spaces then consider getting help from a tenant agent. Their services do not cost you anything and you’ll save a great deal of money and time.