Renting Out Warehouse Space For New BusinessesRenting Out Warehouse Space For New Businesses
Before you begin looking for a good warehouse space for rent for your small business, you will need to get educated about the commercial real estate leasing process. Being ready should help prevent you from making rapid decisions and costly mistakes you will come to regret later on. Below are some insider suggestions to help make an informed choice when renting a commercial warehouse space your company
Initiate the process of hunting for commercial warehouse space at least 6-12 months before your existing lease terminates or until your perfect move-in-date. Locating the right 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 sort of tenant improvements which the time needed will depend on the scope of work.
completely research your company’s current and future needs. Consult with the different department heads for input as well as some key employees.
Get familiar with the commercial real estate terms and meanings. Different landlords state and quote things otherwise. If you’re unsure about what they mean do not be afraid to ask them to provide more info.
If you’re not knowledgeable about the commercial rental process or the current market conditions then consider engaging the help of a tenant agent. Their services do not cost you anything since landlords pay all the rental commissions. The landlord representative will have an experienced listing agent helping them so it would be a good idea for you to have one too.
Personally tour all the properties that meet your needs so you can make a short list. Keep in mind that the layouts can be reconfigured so don’t get stuck on that. Ask the landlord agents a great deal of questions about the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant improvement allowances, etc..
Don’t settle for the first commercial properties you believe is acceptable for your needs: continue searching until you have at least 2 to three other options. These additional options will work to your advantage since you will know what to expect during the lease negotiations and you will gain more leverage with multiple landlords competing for your tenancy. They also give you something to fall back to whether the discussions to your first choice go sideways.
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 word. Everything should be in writing.
To help you decide what property is most suitable for your business, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you should put into consideration include the dimensions of this 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 simply 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 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 important that you figure out what improvements you want on each and get preliminary bids. This way if the landlord is offering a tenant improvement allowance you will know just 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 each landlord to negotiate extra 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 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’s time to have the landlord provide you the first draft of this commercial lease contract.
Now it’s time to review the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant representative then they can review the lease with you as well. Industrial 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 lease contract negotiations has ended the building owner will give you a copy of the lease to sign.
There are several more things to consider when renting commercial property however these suggestions will help get you started. If you’re a new business renting space for the first time or an existing business who has only rented one or 2 spaces then consider getting help from a tenant representative. Their services do not cost you anything and you will save a lot of money and time.