Tom Miller, CCIM
Here’s Why You Shouldn’t Negotiate Your Own Warehouse Lease
The idea may sound simple, but the reality of finding your own warehouse and negotiating the lease will most certainly be more challenging. If you’re imagining narrowing your own search by looking for properties online, here’s what you’ll need to know:
How big of a space do you need? Is that size likely to change in the future? Don’t forget to factor for expansion or downsizing.
hat kind of lease term are you considering? Do you have trending market prices to reference, and can you succinctly define your short and long-term needs? You’ll need to be able to do both to get the best warehouse.
Will Class A, B or C work for your warehouse needs? Do you understand the differences? And do you know what that matters?
Which parts of town are you considering? Have you factored for details like truck terminals, proximity to the freeway, flood-prone areas, sub-par data communication infrastructures and other considerations? Do you have time to research details like these?
Can you quickly and easily perform a comprehensive search for all suitable properties in a given area? You’ll want to include details like eave height, docks, office size, available power, drive-in doors, fire sprinkler capacity, rail service, asking rents, column space, zoning, etc. And if you can compile everything in an easy-to-read spreadsheet, that will make things much easier for you.
Once you’ve completed these steps, making contact with the landlord or his agent will be next. You’ll need to do the following.
Set up property tours at the facilities you’re considering. Remember to share only the information that will serve you in the upcoming lease rate/term negotiation – don’t give anything away. Do you have the experience to handle something like that
Carefully evaluate each property, factoring for things like the landlord’s portfolio vacancy, the overall submarket vacancy, the specific size vacancy, the landlord’s negotiating tendencies compared to his asking rates, whether or not another transaction is pending, and other considerations that will have an impact. Can you successfully pull together your short list without missing something important?
Now that you have your short list, the busy work begins.
Depending on your unique situation, your next step will be making an offer or assembling and submitting an RFP. Any idea how to go about either of those?
You’ll need to evaluate the responses you get, make an educated decision and then finalize your negotiations. This is a critical step that can save time and money if you do it right.
When you get the lease documents (all fifty plus of them), review them carefully and then submit your requests for revisions. Are you familiar with REIT leases?
If you still think doing it yourself is the easy way to save time and money, keep in mind that the landlord and his agent both have far more experience than you in these matters. You can do all of this yourself, or you can partner with an experienced industrial real estate agent who does this kind of thing for a living. You can benefit from his experience and knowledge, and you can continue working and living your life while these steps and details are handled for you. His services come at no cost to you – and with great benefit.
And whether or not you decide to proceed solo or with an experienced partner on your side, visit our Resources page for valuable downloads and free information, including our 13-Step Lease Process Guide, our Warehouse Guide, Six Fatal Errors in the Leasing Process and our Property Tour Guidelines.