When Should I Start Looking for Industrial Real Estate?
Understanding, of course, that a tenant should have a professional overseeing his real estate, there really isn’t a simple response to the question of when to begin the industrial real estate hunt. Unfortunately, I cannot advise you to begin searching for the right space three, six or ten months in advance of your need. As it happens, the reason that number varies from one tenant to the next is a prime example of the value of a real estate professional working for you!
Here are a few common scenarios.
Your business is growing and you know you’ll need a larger space when your lease is up. However, you have quite a bit of time on your current lease, so you plan to tough it out now and get the space you need when this lease expires.
A better idea: Call your agent. You may be surprised to learn you actually have options today. I can think of three avenues that would allow you to move your business into that larger space quickly, if not immediately, and shed that the current lease obligation.
Your business is shrinking. In spite of the best planning and effort, it does happen. In some instances, you really need less space – and that reduced overhead that comes with it. But you’re stuck with your current lease, so you’ll limp along until then.
Again: Call your agent. There are two solid plans that I can put in place to reduce your overhead and get you into an appropriately-sized space.
If you’re entering a new market for the first time, your lead time will vary based on your needs. Basic needs in a balanced market? Good news – the lead time may be as short as a few months before you can move in. Still, even in a balanced market, available vacancy in the size range you’re considering for can vary considerable.
If you have budget constraints, your choices may be limited again, which means your timing to secure a location may be extended. In some cases, new tenants need specific building features that add both time and complexity to the search – things like extra wide drive-in doors, truck docks on very small warehouses, rail to the building, yards, high amounts of power, etc. Of course, nearly everything can be accommodated sooner or later, but timing is everything. In this scenario, the sooner you engage your real estate professional, the better. Once a decision is made about a particular area of consideration, it isn’t too soon to take advantage of the services of a real estate professional.
If you’re a lease renewal candidate, the earlier you involve your tenant, the better. There are numerous strategic advantages that time buys you in the renewal process. As time shortens, so does your negotiating power.
There are four or five surefire ways to secure the very best renewal rates and terms. The earlier your agent gets started, the more of these methods he has at his disposal. If you wait until the landlord offers a renewal rate, it’s already too late – your agent is now coming up to bat for you with one strike. The landlord has beaten you to the punch, effectively, and already has a slight upper hand in the negotiation. If you’ve been in communication with the landlord’s agent already, this may be another tick against you.
Here’s the takeaway – as soon as you’ve decided that you need more space, less space, a new location or a renewal, your next step should be to involve your agent. You really can’t go wrong with that approach.