Recommendations For Negotiating The Very Best Contract When Looking For Commercial Warehouse Space For Lease
Before you start searching for the perfect warehouse space for rent for your company, you should to get educated about the commercial space leasing process. Being ready should prevent you from making expeditious decisions and costly mistakes you will probably regret in the future. The following are some insider tips to help make an informed choice when letting a commercial real estate your business
Initiate the process of hunting commercial space at least 6-12 months before your current 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 space and current market conditions. In most cases the spaces you like will need some sort of improvements which the time needed will depend on the scope of work.
completely examine your business’s present and future needs. Consult with the different department heads for input in addition to some key employees.
Get acquainted with allthe commercial space terms and meanings. Different landlords say and quote things otherwise. If you’re unsure 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 rep. Their services do not cost anything since landlords pay all the leasing fees. The landlord rep will have an professional listing agent helping them so it would be a good idea for you to have one also.
Physically tour all the spaces that meet your requirements so you can make a brief 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 regarding the ownership, property amenities, required lease duration, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial space you think is acceptable for your requirements: continue searching until you have at least 2 to three other choices. These extra options will work to your advantage because you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your business. They also give you something to fall back to if the negotiations to your first choice go sideways.
Send out proposals to your top three to five choices. These are not legally binding. You never want to have a landlord representative’s verbal note. Everything needs to be in writing.
To help you decide what property is best suited for your business, prepare a spreadsheet to do an apples to apples comparison of every property. A few of the things you should put into consideration include the dimensions of the space, the asking base rental rates, the required lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). You can also 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 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 expenditures then dividing by 12.
If any of the commercial spaces need tenant improvements then it’s important that you determine what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will learn just 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 makes sense to go back to every landlord to negotiate additional concessions. Be certain you fully 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 lead to you signing a contract your business cannot live up to.
After negotiations 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 reassess the commercial rental contract. It would be wise 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 particular lease items or would like to propose new language now is the time to do so.
Once the end of rental contract negotiations has finished the building owner will give you a draft of the lease to sign.
There are many more things to consider when renting commercial real estate however these ideas will help get you started. If you’re a new business renting commercial property for the first time or an current business who has just leased one or 2 spaces then consider getting help from a tenant rep. Their services don’t cost you anything and you’ll save a lot of money and time.