Before you begin searching for an excellent warehouse space for your small company, you need to get informed about the commercial property leasing procedure. Being prepared should help prevent you from making rapid decisions and costly mistakes thatyou will end up regretting in the future. The following are some insider suggestions to help make an informed choice when letting a commercial space your business
Initiate the process of hunting for commercial space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Locating the right space and negotiating the deal will require 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will need some type of modifications that the time needed will depend on the scope of work.
completely analyze your company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial space terms and definitions. Different landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to get more information.
If you are not familiar with the commercial real estate leasing process or the current market conditions then consider engaging the support of a tenant representative. Their services do not cost you anything since building owners pay all the rental fees. The landlord agent will have an experienced listing agent representing them so it would be a good idea for you to have one also.
Physically tour all the properties that meet your requirements so thatyou can make a brief list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord reps a lot of questions regarding the ownership, property amenities, required lease term length, how much the landlord is willing to give in tenant construction allowances, etc..
Do not settle for the first commercial space you think is suitable for your requirements: continue looking until you have at least two to three alternative options. 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 whether the discussions for your first choice go silent.
Send out proposals to your top three to five options. These aren’t legally binding. You never need to take a landlord agent’s verbal word. Everything should be in writing.
To help you decide what property is most suitable for your company, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you need to consider include the size of the distance, the inquiring 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 are 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 over your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate and any operating expenses then dividing by 12.
If some of the commercial spaces need tenant finish-outs then it is crucial that you determine what changes you want on each and get bids from contractors. That way if the landlord is offering a tenant improvement allowance you will learn just 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 every landlord to negotiate extra concessions. Make sure you completely understand the total expenses you are expected to cover. Do not get emotionally attached to a certain property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business cannot live up to.
After discussions are finalized and you’ve 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 reassess 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 can review the lease with you as well. Industrial lease language can be negotiated. If you do not like particular lease items or want to propose new language today is the time to do so.
When the end of lease contract negotiations has finished the landlord will provide you a copy of the lease to review.
There are many more things to consider when leasing commercial space however these ideas will help get you going. If you are a new company leasing commercial property for the first time or an existing company 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 great deal of money and time.