Tips For Negotiating The Best Price When Hunting For Commercial Warehouse Real Estate To Rent
Before you begin searching for an excellent warehouse space for rent for your company, you need to get educated about the commercial real estate leasing process. Being ready should keep you from making hasty decisions and costly mistakes you will end up regretting in the future. The following are some insider suggestions to help make an informed decision when renting a commercial space your company
Start the process of searching for commercial space at least 6-12 months before your current lease expires or until your perfect move-in-date. Finding the perfect space and negotiating the deal will take 1-2 months depending upon the size space and current market conditions. Typically the spaces you like will need some sort of modifications which the time needed will depend on the scope of work.
completely analyze your business’s current and future needs. Consult with the various department heads for input in addition to some key employees.
Get acquainted with the commercial space terms and definitions. Various landlords state and quote things otherwise. If you’re unsure about what they mean do not be afraid to ask them to supply more info.
If you’re not familiar with the commercial rental process or the current market conditions then consider engaging the help of a tenant representative. Their services do not cost anything since building owners pay all of the rental fees. The landlord representative will have an expert listing agent representing them so it would be a great idea for you to have one also.
Personally visit all of the spaces that meet your needs 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 lot of questions about who owns the property, 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 think is suitable for your needs: continue searching until you have at least two to three other choices. These extra options will work to your benefit since you will know what to expect during the lease negotiations and you will gain more leverage with numerous building owners competing for your company. 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 choices. These aren’t legally binding. You never need to take a landlord representative’s verbal note. Everything needs to 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 every property. Some of the things you need to consider include the size of the space, the asking foundation rental rates, the necessary lease term, and the incremental costs (taxes, insurance, maintenance, etc). It is also possible to 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 industrial space square feet from the asking base rate and any operating expenditures then dividing by 12.
If some of the commercial spaces need tenant finish-outs then it’s essential that you figure out what changes you want on each and get bids from contractors. That way if the landlord is offering a tenant improvement allowance you will know 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 additional concessions. Be sure you fully understand the total expenses you’re expected to cover. Do not get emotionally attached to a certain 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 the commercial rental contract.
Now it’s time to review the commercial rental contract. It would be wise 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 particular lease items or would like to propose new language today is the time to do so.
Once the end of rental contract negotiations has ended the landlord will supply you a draft of the lease to review and sign.
There are several more things to think about when renting commercial property however these tips will help get you started. If you’re a new business renting space for the first time or an current business who has only leased 1 or two spaces then consider getting help from a tenant representative. Their services don’t cost you anything and you will save a lot of time and money.
