Before you start searching for an excellent warehouse space for rent for your small business, you will need to get informed about the commercial property leasing procedure. Being ready will help prevent you from making rapid decisions and costly mistakes thatyou will probably regret in the future. Below are some insider tips to help make an informed choice when leasing a commercial real estate your company
Initiate the process of hunting 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 on the size area and current market conditions. In most cases the spaces you like will require some sort of improvements which the time needed will depend on the scope of work.
Thoroughly analyze your company’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial property terms and meanings. Various landlords say and quote things differently. If you’re in doubt about what they mean do not be afraid to ask them to get more information.
If you’re not knowledgeable about the commercial leasing process or the present market conditions then consider engaging the support of a tenant rep. Their services do not cost anything since landlords pay all the rental commissions. The landlord agent will have an professional listing agent advising them so it would be a great idea for you to have one too.
Personally visit all the spaces that meet your requirements so thatyou can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions about the ownership, property amenities, required lease duration, how much the landlord is willing to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is suitable for your requirements: continue looking until you have at least two to 3 other options. These extra options will work to your advantage because you will know what to expect during the lease negotiations and you will gain more leverage with multiple landlords competing for your business. They also give you something to fall back to if the negotiations for your first choice fall through.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever need to take a landlord representative’s verbal note. Everything should be in writing.
To help you decide what property is most suitable for your business, 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 dimensions of the space, the asking base rental rates, the required lease term, and the incremental expenses (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 which 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 expenses then dividing by 12.
If any of the commercial properties require tenant improvements then it is important that you determine what improvements you want on each and get bids from contractors. This way if the landlord is offering a tenant improvement allowance you will know how much out of pocket you will have to pay over and beyond what the landlord is willing to give.
Carefully examine 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 specific property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After negotiations are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of the commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable 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. Industrial lease language can be negotiated. If you do not like certain lease items or want to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the landlord will give you a copy of the lease to review.
There are many more things to consider when leasing commercial property however these suggestions will help get you started. If you’re a new business leasing space for the first time or an current business who has only leased one or two spaces then consider getting help from a tenant agent. Their services do not cost you anything and you will save a lot of money and time.