There are many misconceptions about industrial real estate – our seven-part series on persistent
industrial real estate myths tackles many of them – but one of the biggest is the idea that a business owner will save both time and money by managing their own property search and ensuing negotiations. At face value, all you need to do is look online, drive around a bit to see what’s out there, find a property that looks good, call the listing agent, and negotiate the terms. Sounds simple enough. Unfortunately, this simplified, and frankly rosy, take on the process fails to account for the many, many variables that inevitably arise. It’s those variables that make negotiating your own industrial real estate lease a mistake.
Step One
Before you even begin browsing online listings or taking a drive through your desired neighborhood, you should have a clear understanding of both pertinent information and how-to that includes, but isn’t limited to:
Required space, factoring for future likelihood of expansions or downsizing.
Appropriate lease term. You can determine a suitable length for your needs by referencing trending market prices, but be very clear about what you’ll need both short and long-term.
Warehouse classifications, and what will best suit your needs. This means, of course, that you’ll need to understand the differences between the classes and why those differences matter.
Ideal location for your property. Beyond considerations like freeway access and truck terminals, be clear on things like flood-prone areas and those with poor data communication infrastructures. This can take time to research, so plan accordingly.
The best way to conduct an extensive search for the right properties in the right area. Factoring for details like docks, office size, eave height, drive-in doors, fire sprinkler capacity, rail service, column space, asking rents, zoning, available power, and other specifics will help you narrow down your list. We recommend compiling the results in a spreadsheet for easy comparisons.
Step Two
Once you’ve handled all of these steps, step two is contacting the landlord or his listing agent. This means another series of to-dos.
Arrange your property tours. May we suggest following these tips to avoid costly mistakes.
Evaluate the properties you viewed. Consider each in terms of the landlord’s portfolio vacancy, his negotiating tendencies compared to his asking rates, the number of offers on the table, the overall submarket vacancy, and other critical factors. Our free guide will help you avoid fatal missteps at this juncture.
Step Three
Once you’ve narrowed down your properties, you can begin the offer and negotiation portion of your transaction.
Make an offer or assemble and submit an RFP.
Evaluate the responses and finalize your negotiations. If you know what you’re doing, you can save time and money at this point.
Review the comprehensive lease document pages and submit your revisions. You should review REIT leases to handle this properly.
This is a far more realistic outline of the lease process. If you’re still certain that you can simultaneously handle these steps, along with any variables that come up, while successfully running your business, and save yourself time and money, then take advantage of our valuable downloads and free information for guidance:
If this clarifies that you’ll be far better off handing off these tasks to the people who do it for a living, and you prefer to benefit from the experience and expertise of a knowledgeable industrial real estate agent – whose services come at no cost to you – contact Miller Industrial Properties today. We’re happy to offer some insight into how we really can save you time and money.
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