Before you start looking for the perfect Sonoma wine tasting for your business, you will need to get informed about the commercial warehouse leasing process. Being ready will prevent you from making hasty decisions and costly mistakes thatyou will probably regret later on. The following are some insider tips to help make an informed choice when renting a commercial space your business
Initiate the process of hunting for commercial space for lease at least 6-12 months before your current lease terminates or before your ideal 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. Typically the spaces you like will need some type of improvements which the time required will depend on the scope of work.
completely examine your company’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial space terms and definitions. Various landlords say and quote things otherwise. If you are unsure about what they mean do not be afraid to ask them to provide more information.
If you are not familiar with the commercial leasing process or the present market conditions then consider engaging the assistance of a tenant rep. Their services do not cost you anything because landlords pay all of the rental commissions. The landlord representative will have an knowledgable listing agent advising them so it would be a great idea for you to have one too.
Personally visit all of the spaces that meet your needs so thatyou can make a short list. Bear in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions about who owns the property, 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 properties you think is acceptable for your needs: continue looking until you have at least 2 to three other choices. These extra options will work to your benefit since you will know what to expect during the lease negotiations and you’ll gain more leverage with multiple landlords 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 aren’t legally binding. You don’t ever want to have a landlord representative’s verbal note. Everything needs to 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 each property. Some of the things you need to consider include the dimensions of the space, the inquiring foundation 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 eliminating those that are way over 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 some of the commercial properties need tenant improvements then it is critical 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 know how much out of pocket you’ll have to pay over and beyond what the landlord is prepared to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to return to each landlord to negotiate additional concessions. Make sure you completely understand the total expenses you are expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After discussions 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 reassess 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 could review the lease with you as well. Industrial lease language could be negotiated. If you do not like particular lease items or would like to propose new language now is the time to do so.
Once the end of lease contract negotiations has ended the building owner will supply you a copy of the lease to review.
There are many more things to consider when renting commercial space however these suggestions will help get you started. If you are a new company renting space for the first time or an current company who has only leased one or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you’ll save a great deal of money and time.