Before you begin looking for a great warehouse space for your startup company, you should to get informed about the commercial space leasing process. Being ready will prevent you from making hasty decisions and costly mistakes you will probably regret in the future. Below are some insider suggestions to help make an informed decision when leasing a commercial space your company
Initiate the process of searching 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 alonewill take 1-2 months depending on the size area and current market conditions. In most cases the spaces you like will require some type of improvements which the time required will depend on the scope of work.
completely examine your business’s present and future needs. Consult with the different department heads for input as well as some key employees.
Get acquainted with the commercial real estate terms and meanings. Various landlords state and quote things otherwise. If you’re in doubt about what they mean do not be afraid to ask them to provide 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 agent. Their services do not cost anything because building owners compensate all the leasing commissions. The landlord agent will have an professional listing agent representing them so it would be a great idea for you to have one too.
Physically tour all the spaces that meet your needs 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 representatives a great deal of questions about who owns the property, 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 space you believe is suitable for your needs: continue searching until you have at least two to three alternative choices. These additional options will work to your benefit since you will know what to expect throughout the lease negotiations and you’ll gain more leverage with multiple building owners competing for your tenancy. They also give you something to fall back to whether the discussions to 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 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 each property. A few of the things you should consider include the size of the space, the asking foundation rental rates, the required lease term, 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 eliminating those which are way above your budget. The monthly base rent is calculated by multiplying the industrial space square feet from the asking base rate plus any operating expenditures then dividing by 12.
If any of the commercial properties require tenant improvements then it’s crucial that you determine what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will know just how much out of pocket you’ll have to pay above and beyond what the landlord is willing to give.
Carefully analyze and compare the terms of each proposal. Consider whether it is logical to return to each landlord to negotiate extra 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 discussions are over. Emotional attachment might result in you signing a contract your business can’t live up to.
After discussions are finalized and you have 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 review the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant representative then they can review the lease with you also. Commercial lease language can be negotiated. If you do not like certain lease items or would like to propose new language today is the time to do so.
When the end of rental contract negotiations has finished the landlord will provide you a copy of the lease to review and sign.
There are several more things to think about when leasing commercial real estate however these suggestions will help get you started. If you’re a new company leasing space for the first time or an existing company who has just rented 1 or two 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.