Leasing Industrial Space can be at times a difficult process. It is important to have as much information before committing and signing a Lease. In order to make a knowledgeable decision regarding leasing Industrial space and avoiding major disruption to your business, it is very helpful to study the 4 step guide to leasing Industrial space.
Step One Identifying Your Space Needs.
If you don’t plan you’re leasing process and understand your leasing needs. You could end up losing a lot of money and time. In this process it is important to considering your upcoming business goals. How do you see the future of your business within the next 3 years to 10 years?
- How is the progress and growth of your business?
- Do you anticipate that you will require more space?
- What type of impact would relocation have on your staff and clients?
By working through this concept planning phase, you will achieve the maximum benefit—both financial and strategic—in the relocation or reconfiguration of your facility. If the workplace design happens solely during the design and construction phase, only minimal gains are possible.
Involving various decision makers from your various departments is also equally important. Their feedback and input is important as they are directly involved in the business. This could be your finance department as they will share their feedback in terms of your financial position and how much room you have. Your plant and operation managers as well as your vendors who supply and maintain your machinery are important. They can help in terms of your space technical requirements such as upgrading power or the ability and cost of transporting of equipment and the availability of technicians.
A team leader should be appointed in this process to collect everyone’s feedback and make an informed decision. Once your team leader obtains the feedback of the various departments, you should put it in writing by creating a summary of your space requirements. This would include information as follows:
- Size of space – minimum to maximum
- Image/quality/aesthetics
- Location
- Parking (cars and trucks)
- Clear height
- Loading doors
- Proximity to major highways
- Office hours
- Security and access
- Technical requirements
- Timing
- Communications infrastructure
- Budget
- Environmental considerations
- Other unique needs
- Term/renewals
Having all the details will help in speeding up the process and be more efficient and get exactly what you are looking for. Keeping in mind that at times you may not get 100% of exactly what you are looking for. However, having your list of requirements will help in evaluating what is most important for your business needs.
In order to negotiate the best of terms, you should be aware of the market. What types of space is available, at what prices and how much space is available.
Step Two Assess And Evaluate Your Options
Do not approach multiple Brokers, it is important to choose one Broker to share your summary of space requirements and work on your behalf. Otherwise no one will take you seriously.
Having a Broker that specializes in the Industrial market is essential. They will ensure to contact the right people in the most efficient way and locate your space for you. In fact someone that specializes in the area can also contact your existing landlord and discuss renewal options that would be beneficial to you.
Your Broker will help you in getting a short list of 3 to 4 properties that would be suitable for your needs. This list would have considered your financial position, timings and the incentives offered. When considering a renewal option ensure that you keep various costs in reconfiguring the space in mind.
When evaluating your options, you will have to consider what each space is providing in terms of incentives:
- Rent Free periods
- Any Leasehold improvements allowance
- Rent escalation
- Term Length
- Renewal options
Viewing the short listed properties will give you a better idea in determining whether the space will work for your use. This site visit will help in determining how much leasehold improvements you will require, some spaces may require less work others may require more work depending how much of the space you can reuse and this will help in evaluating which option if more financially beneficial to you.
Step Three Letter Of Intent
At this point your Broker has had the opportunity to discuss and negotiate with the landlord the terms of the lease and as a gesture of good faith both parties would sign a letter of intent that would include all the details negotiated. This document is generally not binding and is forwarded to the attorneys to prepare the final and binding Lease Agreement.
Once the lease agreement is signed, immediately after your space planning and leasehold improvements have to start. At this point all professionals required in this process should be retained. The sooner the professionals are retained the better the end result as it will help in providing your vendors and technicians with correct information for a smooth transition.
Step Four Designing Your Space
At this stage you have chosen your space and negotiated your lease. It’s time for the final stage of choosing your space; the design and construction. This is also the time in case you want to make changes to the design of your space. You may rethink your design options for better and effectiveness and use of the facility for your business and the staff.
Once you have gathered your thoughts in the design you should commence the detailed design and review the costs associated. It is important to create timelines for the construction process. Once you are ready to proceed you must prepare the documentation for the appropriate authorities as well as the Landlord.
You may have a bid process for the construction and building of the space. Gather all the necessary documentation to provide to the construction companies including building and construction permits.
Once you receive the bids from the construction companies, you must analyze each bid in detail to ensure you are choosing the right construction company; one that has the experience and will meet your timeline and budget requirements.
Ensure your assigned team leader for the project is in constant contact with all the appointed contractors and suppliers.
The team leader should ensure the following steps are always followed through:
- Coordinate all required meetings
- Coordinate quality control inspections
- Cost and variation management
- Project manage delivery program
- Project completion/occupation
- Oversee practical completion
- Issue Code of Compliance certificate
- Inspection and sign-off
- Manage the identification and completion of all outstanding and defective works
- Cost reporting and final accounts
- As-built drawings, operating manuals, guarantees and warranties
- Final inspection and completion of works at the end of the defects liability period
