Tips on Finding and Negotiating Office Warehouse For rent

With continued changes in the way many businesses operate, instead of just needing to find warehouse space for rent, a number of businesses look to combine warehouse space with office or showroom space. This hybrid type of property is often called Office Warehouse space or Flex space.

Some such spaces are purpose built and can be found in light or semi-industrial or business parks as long as the use of the warehouse is “clean and light”, that is no heavy, “dirty” manufacturing. Other spaces are essentially warehouse space that has been adapted to include dual or multi-use under one roof.

For an occupier looking to lease such office warehouse space, here are some great tips on about how to go about it:

What to consider when looking for Office Warehouse for rent

First and foremost, a prospective tenant needs to determine and have a clear idea about the proposed business they will operate from the space. For example, will it be mainly offices with lots of staff and/or visitors, or a warehouse where there will be frequent deliveries and dispatches, such as with an e-commerce business? Or will the space be mainly for storage with infrequent comings and goings? Or for a showroom or repair workshop?

The size and floor plate layout of the office warehouse space is also important. Will the space on offer be able to accommodate your current needs, but also is there enough room for potential expansion if business booms? Is the floor plate regular in size and easily sub-divisible into multi-uses, or is there going to be a lot of wasted space as the floor plate is not conducive to effective combined office and warehouse operations?

Well, here are some more important considerations to bear in mind when thinking about office warehouse space, and key questions to be addressed:

Physical Property Features

  • does the lease unit need good visibility (if part is a showroom or office) with some special aesthetic appeal?
  • is a standard ceiling height of between 12-18 feet workable or does it need to be maybe even as high as 25 feet?
  • any special floor loading needed for, say, a printing press or other heavy items?
  • is HVAC (heating, ventilation, air-conditioning) required for the warehouse portion?
  • for utilities, is 3 phase electricity power needed, or any extra water supply for, say, cooling processes?
  • capabilities of the internet: is the installation fibre optic or gigabit internet, and how many internet service providers (ISPs) are active in the area?;
  • what about dock high or grade loading/unloading? Height and width of such access?
  • is adequate security, both technologically (entrance scanners, CCTV) and human (guards)?
  • how many employee and, if required, customer car parking spaces will be needed on site? Will such spaces be provided free of change or need to be paid for?
  • if practical, is there a combination of sufficient sunlight and/or adequate lighting, inspiring views, fresh air to ensure the business premises are attractive and, hence, more productive to work in? Also, perhaps, are there onsite fitness centres, day care facilities or coffee shops/cafes?

Permissible zoning

In the early stages of searching for office warehouse space, local zoning laws will need to be checked as, sometimes, what may appear to be an ideal location and spatial requirements may not be compatible for your specific use. In some cases, rezoning may be possible with some minor modifications.

In any event, the landlord of the space you are interested in will also have to give consent to allow your type of business at a certain location even if zoning requirements are met. For example, there may also be a competing business in the building/business park already and the landlord wishes to keep a balanced variety of tenant uses.

Location is always important

The old maxim about location being paramount for success in real estate still holds true but, with changes in technology and the way some businesses such as e-commerce operate, having a fantastic pedestrian footfall is not always top of the list. Things that do matter include:

  • is the location practical and easily accessible for deliveries and customers who need to visit you, say close to a highway or good road transportation, or even an airport;
  • is it advantageous to be near other related business so some synergies can be created, or maybe collaboration on projects;
  • is being visible on a busy road important or is a quiet location to the rear of a business park better;
  • if you have multiple business locations, is being near another one of your operations likely to bring some economies of scale;
  • do you want to be near some of your competition… or not?

Industrial Lease Types

There are several different types of leases in use with office warehouse space and it is vital to know the nature lease you are potentially going to be signing. Will it be a:

  • modified net lease: where expenditure is divided between tenant and landlord, or;
  • triple net lease: the most common type of lease where tenants pay most of the expenses and the landlord is only responsible for structural repairs; or a variation of these two?

The duration of any lease is, of course, also important. If your projections are for growth, a shorter lease may allow more flexibility in case you need to expand from your current location and can’t secure adjacent space. On the other hand, if your business is likely to remain stable for the foreseeable future, then you may want to commit to a longer-term lease. There are some properties which require a minimum lease term and others a maximum term commitment.

Some basic steps to leasing office warehouse space

After a budget range has been set to include monthly rental, utilities, and property taxes plus the costs of any upgrades or renovations, monthly operations, and any new equipment or furniture, a typical process to seek and secure office warehouse space might be as follows:

  • check the local zoning map to find out which business parks which offer office warehouse or flex spaces are located in the area;
  • either search online for available units or drive past locations of interest to see if there is a letting or management office which can provide information on vacant units; there may also be a “To Rent” sign on some units;
  • alternatively, and a more effective way, contact a local real estate agent who specialises in leasing office warehouse space (**see more below);
  • assemble data about the opportunity(ies) and make arrangement to visit the available properties or, to save time, initially review a video tour if one is provided by the landlord/agent;
  • shortlist the office warehouse units which meet your criteria and, after discussing with the landlord, make a formal application;
  • provide any information requested by the landlord about how you intend to use the space, and about you or the business–including matters such as background checks and income verification;
  • once your application has been approved, a draft lease will usually be provided. After careful review of the complete lease, ideally with your legal adviser, to understand your commitment to the same, respond to the landlord with any questions or queries;
  • once any issues have been resolved and terms and conditions agreed, collect all of the necessary documents so that the lease can be signed; prepare the security deposit cheque, and first month’s rental, as required, plus arrange any necessary insurances;
  • arrange to take possession of the office warehouse units and arrange with the onsite management company about signage, changing names on the utility bills, car-parking issues etc.

The easiest way to find and lease suitable office warehouse space

The above mentioned process can be quite time-consuming, especially if you are trying to run an existing business. Therefore, an alternative, a more effective approach in getting results and helping you find the ideal office warehouse to rent, is to engage a so-called “tenant’s representative”.

Such a tenant’s rep is a commercial real estate broker who specialises in working on behalf of the tenant (ie not the landlord), and can make the searching and negotiation process that much easier. Furthermore, the rep will represent the tenant’s best interests in negotiating against experienced landlord agents in respect of matters such as rent, the rent-free fitting out/remodelling period (if any), liability for repairs, lease duration and renewal provisions etc.

Not only are you getting professional advice and the benefit of the tenant rep’s experience, but the agent will invariably know all about the supply and demand situation in the markets/locations you are looking at. He/she will probably be able to find properties not being openly advertised, given their larger network of landlords, as well as knowledge of other tenants who are looking to move in the future.

As you’re getting the benefit of the brokers knowledge and experience this is very likely to save significant costs in the long-term. Additionally, using the services of a tenant rep does not cost you a dime. Landlords pay the broker fees for both sides of the deal, even if you don’t use a tenant rep.

Example Office Warehouse Layout

In Conclusion

When leasing office warehouse space, it’s important to establish at the outset your key requirements and expectations, then work towards achieving your plans in an effective way.

It’s, therefore, well worth contacting an experienced tenant’s rep even before you start a search, so as the right strategy can be promulgated and followed to enhance your business growth!

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