Before you begin looking for a great warehouse space for rent for your startup company, you need to get informed about the commercial property leasing process. Being prepared will prevent you from making expeditious decisions and costly mistakes thatyou will end up regretting later on. Below are some insider suggestions to help make an informed decision when renting a commercial space your company
Start the process of finding commercial space at least 6-12 months before your current lease terminates or until your ideal move-in-date. Locating the perfect 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 require some type of changes that the time required will depend on the scope of work.
completely analyze your company’s current and future needs. Consult with the different department heads for input in addition to some key employees.
Get familiar with allthe commercial real estate terms and meanings. Various landlords say and quote things differently. If you are unsure about what they mean do not be afraid to ask them to get more information.
If you are not knowledgeable about the commercial rental process or the current market conditions then consider engaging the assistance of a tenant representative. Their services do not cost you anything because landlords compensate all of the rental fees. The landlord representative will have an expert listing agent advising them so it would be a good idea for you to have one also.
Physically 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 reps a lot of questions about the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant construction allowances, etc..
Do not settle for the first commercial space you believe is suitable for your needs: continue looking until you have at least two to 3 alternative choices. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you’ll gain more leverage with numerous landlords competing for your tenancy. They also give you something to fall back to whether the negotiations to your first choice fall through.
Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever want to take 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 every property. Some of the things you need to put into consideration include the size of the distance, the inquiring base rental rates, the necessary lease duration, 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 removing those which 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 any of the commercial spaces require finish out then it is important that you figure out what improvements you want on each and get construction bids. This way if the landlord is offering a construction allowance you will learn how much out of pocket you’ll 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 is logical to go back to every landlord to negotiate additional concessions. Be sure you completely understand the total expenses you are expected to cover. Do not get emotionally attached to a specific property until the negotiations are over. Emotional attachment might result in you signing a contract thatyour business cannot live up to.
After negotiations are finalized and you have made your selection now it is time to have the landlord provide you the first draft of the commercial rental contract.
Now it is time to review 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 can review the lease with you also. Commercial lease language can be negotiated. If you do not like certain lease items or want to propose new language today is the time to do so.
When the end of rental contract negotiations has ended the landlord will give you a draft of the lease to review.
There are many more things to think about when leasing commercial real estate however these suggestions will help get you going. If you are a new company leasing space for the first time or an current company who has just rented 1 or two spaces then consider getting help from a tenant representative. Their services do not cost you anything and you’ll save a lot of money and time.