Ten Easy Steps to Negotiating your Own Warehouse Lease
Can you really negotiate your own warehouse lease? Absolutely! Just follow these ten easy steps.
1. Determine the size of warehouse you need now and what you’ll need in the future. Be sure to factor for possible downsizing and expansion. Your experience in performing this task many times before will make short work of this step.
2. Determine the lease term you want, using the trending market price and your short and longer term needs. Your market awareness, earned after years in the industry, will help here.
3. Determine the appropriate warehouse type (Class A, B or C) for your needs. Since you know exactly which features constitute which class, you’ll waste no time, effort or brain cells researching locations that offer too little or too much of what you want.
4. Determine what parts of town you want to include and exclude from your search. Surely you are familiar with the truck terminal locations, the freeway systems, the areas that are flood prone and the areas that have subpar data communication infrastructures you want to avoid.
5. Perform a comprehensive search for all properties that are available to suit your exact needs, factoring in considerations such as eave height, docks, drive in doors, office size, available power, fire sprinkler capacity, zoning, column spacing, rail service, asking rents, etc. Don’t forget the triple net costs – surely you understand those – as they can be significant.
6. Contact the landlord agent representative of each site and tour each available location. Be very careful to share only the information that will enhance your lease rate/term negotiating and nothing that will harm your cause. Your experience in what to say and not to say will serve you well here.
7. Evaluate each location and assign a desirability factor to each, narrowing the list to three to five top selections. Be sure to factor in such items as the landlord’s portfolio vacancy, the overall submarket vacancy, the specific size vacancy, the landlord’s negotiating tendencies versus their asking rates, whether another transaction is pending or not, etc. Your in-depth industrial real estate market experience and expertise will help you pull together your short list.
8. Your next step might be either, i) Carefully assemble and submit your RFPs, or ii) Make offers. Again, your experience will guide you in this crucial step.
9. Evaluate the responses, make an educated decision and finalize your negotiations. When you do this part right, you can save massive amounts of money and time.
10. Review the 50+ page lease (plus attachments) and make your requests for revisions to balance the lease to a fair landlord/tenant playing field. Your experience with REIT leases will help here. You know what a REIT is, we assume.
Done! As you can see, there’s really nothing to it. However, if you feel that this brief explanation of the steps involved highlights your inexperience in successfully representing yourself and securing the best deal possible, I invite you to consider the alternative. Securing a knowledgeable, experienced industrial agent – one who does not represent the landlord’s interests, evidenced by the names listed on the signs in front of vacant buildings – is never a bad move. Remember, the fee your agent will receive is paid for by the landlord (not you), so take the time to find an agent who has a proven track record and let him do his job. Don’t you have a business to run anyway?