Leasing Commercial Warehouse Properties For Startups

Before you begin looking for a great warehouse space for your business, you will need to get educated about the commercial property leasing procedure. Being prepared should keep you from making rash decisions and costly mistakes you will regret in the future. The following are some insider tips to help make an informed choice when letting a commercial space your business

Initiate the process of finding commercial warehouse space at least 6-12 months before your existing lease expires or until your perfect move-in-date. Locating the correct space and negotiating the deal alonewill require 1-2 months depending upon the size area and current market conditions. Typically the spaces you like will need some type of changes that the time needed will depend on the scope of work.

Thoroughly research your business’s current and future needs. Consult with the various department heads for input in addition to some key employees.

Get familiar with the 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 leasing process or the current market conditions then consider engaging the assistance of a tenant agent. Their services don’t cost you anything because building owners compensate all of the leasing fees. The landlord agent will have an experienced listing agent representing them so it would be a good idea for you to have one as well.

Physically tour all of the properties that meet your needs so you can make a brief list. Bear in mind that the designs can be reconfigured so don’t get stuck on that. Ask the landlord agents a lot of questions regarding the ownership, property amenities, required lease term length, how much the landlord is prepared to give in tenant improvement allowances, etc..

Do not settle for the first commercial properties you believe is suitable for your needs: continue searching until you have at least 2 to three 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 multiple building owners competing for your tenancy. They also give you something to fall back to whether the discussions to your first choice go silent.

Send out proposals to your top three to five choices. These aren’t legally binding. You don’t ever need to have a landlord representative’s verbal note. 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. A few of the things you should consider include the dimensions of this space, the asking base rental rates, the necessary lease duration, and the incremental expenses (taxes, insurance, maintenance, etc). You can also take note about the advantages and disadvantages 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 eliminating those which are way over your budget. The monthly base rent is calculated by multiplying the industrial space square feet by the asking base rate plus any operating expenditures then dividing by 12.

If some of the commercial spaces need tenant improvements then it’s important that you determine what improvements you want on each and get preliminary bids. That way if the landlord is offering a tenant improvement allowance you will learn how much out of pocket you’ll 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 every landlord to negotiate extra concessions. Make certain you completely understand the total expenses you are expected to cover. Do not get emotionally attached to a specific property until the discussions are over. Emotional attachment might lead to you signing a contract your business cannot live up to.

After discussions are finalized and you’ve made your selection now it’s time to have the landlord offer you the first draft of this commercial lease contract.

Now it’s time to reassess the commercial lease contract. It would be advisable for you to hire an attorney to review the lease. If you have a tenant agent then they could review the lease with you as well. Industrial lease language could be negotiated. If you don’t like certain lease items or would like to propose new language now is the time to do so.

When the end of lease contract negotiations has ended the landlord will provide you a draft of the lease to sign.

There are several more things to think about when leasing commercial space however these suggestions will help get you going. If you are a new company leasing space for the first time or an existing company who has just leased 1 or 2 spaces then consider getting help from a tenant agent. Their services don’t cost you anything and you’ll save a lot of money and time.