Leasing industrial real estate for the very first time can be a harrowing experience. There are endless details and nuances to remember and understand – one of the many reasons that partnering with an experienced agent makes such a difference. Regardless of whether you choose to benefit from an agent’s experience or go it alone, here are five important considerations for first-time industrial lessees.
Power
Depending on what you do, power is very important. Do not let this information become an afterthought. Mention your requirement right away (voltage/amps) when discussing options with your agent, or keep it at the forefront of your mind when looking for properties on your own. You will save yourself and everyone involved in the transaction a lot of time.
Market Conditions
Although this fluctuates, the current market in Reno favors the landlord. There is an historically low inventory of available properties to choose from and there is an influx of demand. This means it is going to take you at least twice as long to find the right property – budget time accordingly. Additionally, we are seeing properties scooped up at record rates – the old here today, gone tomorrow story. If you find something that will work for your business, don’t waste time. Preparing yourself to act quickly puts you in the best possible position.
Financials
As a first-time industrial lessee launching a new venture, you will not have financials. Almost every landlord in northern Nevada will require this information, which can vary from bank account information to tax returns and profit and loss statements. Be prepared to offer a personal guarantee if you are looking to lease a decent industrial property in Reno right now.
Length of Lease
I’ve received a lot of calls from individuals or businesses starting a new venture and looking for a one-year lease. Blame it on current market conditions, but landlords rarely want to consider tenants proposing a term of anything less than three years. Most of the leases we are putting together today are based on a five-year term. This does not mean that you won’t be able to find something for your startup year, but you may have to scale back your expectations. You’re not going to get a large class A property. However, if you can settle on a space that is a bit older with little to no concessions, you may be able to bide your time while your company grows into a larger space with more amenities.
NNN Costs
One of smartest things you can do as a first-time industrial or commercial lessee is homework. Specifically, educate yourself on “Triple Net” costs, also referred to as OPEX (operating expenses). Most industrial leases include these additional costs which cover insurance, maintenance and property taxes. NNN costs are calculated based on expected expenses, and they are recalculated each year.
These considerations are important, but they’re just the tip of the iceberg! While it seems like there are a lot of hurdles to jump in securing your first industrial lease, it isn’t impossible. The process is made simpler when you hire an experienced agent who specializes in this field. We handle this kind of work every day and we are familiar with the ever changing northern Nevada market. Have questions? We can help.
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