Before you start looking for a great Sonoma wine tasting for your small business, you need to get informed about the commercial property leasing process. Being prepared will keep you from making impulsive decisions and costly mistakes you will end up regretting later on. Below are some insider tips to help make an informed choice when leasing a commercial warehouse space your business
Start the process of hunting commercial space at least 6-12 months before your existing lease expires or before your ideal move-in-date. Finding the right space and negotiating the deal will require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will require some sort of improvements which the time required will depend on the scope of work.
completely analyze your company’s present and future needs. Consult with the various department heads for input as well as some key employees.
Get familiar with allthe commercial property terms and definitions. Various landlords say and quote things otherwise. If you’re in doubt about what they mean don’t be afraid to ask them to supply more info.
If you’re not familiar with the commercial real estate leasing process or the present market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost you anything because landlords pay all the leasing fees. The landlord agent will have an expert listing agent helping them so it would be a great idea for you to have one too.
Personally tour all the properties that meet your requirements so you can make a brief list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a great deal of questions regarding the ownership, property amenities, required lease duration, how much the landlord is willing to give in tenant construction allowances, etc..
Do not 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 benefit since you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your company. 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 are not legally binding. You never need 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 every property. A few of the things you need to put into consideration include the dimensions of the distance, the inquiring base rental rates, the required lease duration, and the incremental costs (taxes, insurance, maintenance, etc). You can also take note about the advantages and disadvantages 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 removing those that are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet by the asking base rate and any operating expenses then dividing by 12.
If some 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. That 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 willing to give.
Carefully examine and compare the terms of each proposal. Consider whether it is logical to return to every landlord to negotiate additional concessions. Be sure you fully understand the total expenses you’re 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 your business can’t live up to.
After discussions are finalized and you’ve made your selection now it is time to have the landlord offer you the first draft of the commercial rental contract.
Now it is time to reassess the commercial rental contract. It would be wise for you to hire an attorney to review the lease. If you have a tenant representative then they could review the lease with you also. Industrial lease language could be negotiated. If you don’t like particular lease items or would like to propose new language now is the time to do so.
When the end of rental contract negotiations has ended the building owner will give you a copy of the lease to review.
There are many more things to think about when leasing commercial property however these suggestions will help get you going. If you’re a new company leasing commercial space 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’ll save a lot of time and money.