Before you begin looking for the perfect warehouse space for your startup company, you should to get educated about the commercial space leasing procedure. Being prepared should prevent you from making rash decisions and costly mistakes thatyou will end up regretting later on. Below are some insider tips to help make an informed choice when renting a commercial space your business
Start the process of finding commercial space for lease at least 6-12 months before your existing lease expires or until your ideal move-in-date. Finding the right space and negotiating the deal alonewill take 1-2 months depending on the size space and current market conditions. Typically the spaces you like will need some sort of changes that the time required will depend on the scope of work.
completely research your business’s present and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with allthe commercial real estate terms and meanings. Different landlords say and quote things differently. If you are in doubt about what they mean don’t be afraid to ask them to provide more information.
If you are not familiar with the commercial property leasing process or the present market conditions then consider engaging the support of a tenant rep. Their services don’t cost you anything because landlords compensate all the rental commissions. The landlord representative will have an expert listing agent representing them so it would be a great idea for you to have one too.
Personally see all the spaces that meet your needs so thatyou can make a short list. Keep in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord representatives a lot of questions regarding the ownership, 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 space you believe is suitable for your needs: continue searching until you have at least 2 to three alternative options. These extra options will work to your advantage because you will know what to expect throughout 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 if the discussions for your first choice go sideways.
Send out proposals to your top three to five options. These aren’t legally binding. You don’t ever need to have a landlord representative’s verbal word. Everything needs to be in writing.
To help you decide what property is best suited for your company, prepare a spreadsheet to do an apples to apples comparison of each property. A few of the things you need to consider include the dimensions of this distance, the asking base rental rates, the required lease term, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to take note about the advantages and disadvantages of each property. If you are 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 commercial space square feet from the asking base rate plus any operating expenses then dividing by 12.
If some of the commercial properties need reconfiguring then it’s important that you figure out what changes you want on each and get construction bids. This way if the landlord is offering a construction allowance you will know just how much out of pocket you will 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 is logical to return to each landlord to negotiate extra concessions. Make certain you fully understand the total expenses you are expected to cover. Don’t get emotionally attached to a specific property until the discussions are over. Emotional attachment might lead to you signing a contract thatyour business can’t live up to.
After discussions are finalized and you’ve made your selection now it’s time to have the landlord provide you the first draft of this commercial rental contract.
Now it’s time to reassess the commercial rental contract. It would be advisable for you to hire an attorney to review the lease. For those who have a tenant agent then they could review the lease with you as well. Commercial lease language could be negotiated. If you don’t like particular lease items or would like to propose new language today is the time to do so.
When the end of rental contract negotiations has ended the landlord will provide you a draft of the lease to review and sign.
There are several more things to consider when renting commercial property however these tips will help get you started. If you are a new company renting commercial property for the first time or an existing company who has only rented one or 2 spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a great deal of money and time.