Before you start looking for a great warehouse space for your small business, you will need to get informed about the commercial space leasing procedure. Being ready will help prevent you from making expeditious decisions and costly mistakes you will come to regret in the future. Below are some insider suggestions to help make an informed decision when leasing a commercial real estate 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 correct space and negotiating the deal will take 1-2 months depending on the size space and current market conditions. In most cases the spaces you like will require some sort of improvements which the time needed will depend on the scope of work.
Thoroughly examine your company’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial property terms and definitions. Various landlords state and quote things differently. If you’re unsure about what they mean don’t be afraid to ask them to get more info.
If you’re not knowledgeable about the commercial property leasing process or the current market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost you anything since landlords pay all of the rental commissions. The landlord agent will have an professional listing agent helping them so it would be a great idea for you to have one also.
Physically tour all of the spaces 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 reps a lot of questions regarding who owns the property, property amenities, required lease duration, 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 requirements: continue searching until you have at least 2 to 3 other choices. These extra 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 landlords competing for your business. They also give you something to fall back to whether the negotiations to your first choice go silent.
Send out proposals to your top three to five choices. These are not legally binding. You never want to take a landlord agent’s verbal note. Everything should 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 size of this distance, the asking foundation rental rates, the required lease term, and the incremental costs (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 simply calculating the monthly base rents for each property then removing those which are way above your budget. The monthly base rent is calculated by multiplying the commercial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial spaces require tenant improvements then it is critical that you determine what changes you want on each and get construction bids. This way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you will have to pay above and beyond what the landlord is prepared to give.
Carefully analyze and compare the terms of each proposal. Consider whether it makes sense to return to every 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 negotiations are over. Emotional attachment might result in you signing a contract your business can’t live up to.
After negotiations are finalized and you’ve made your selection now it is time to have the landlord provide you the first draft of this commercial rental contract.
Now it is time to reassess 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 could review the lease with you also. Commercial lease language could be negotiated. If you don’t like particular lease items or want to propose new language now is the time to do so.
When the end of rental contract negotiations has finished the building owner will give you a draft of the lease to review.
There are many more things to consider when renting commercial property however these suggestions will help get you going. If you’re a new business renting commercial space for the first time or an existing business who has just rented one or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you will save a great deal of money and time.
