How to Rent Warehouse & Industrial Space

warehouse space in austinIf your business sells, receives, and or ships physical products or plans on doing so then you will probably need warehouse space for rent. Manufacturing buildings, warehouses, & multi use spaces all fall in the industrial space category.  They may be used for storage of goods & products, fulfillment, storage, or distribution.

If you need Austin warehouse space for rent call 512-861-0525

Below are a few tips on what to look for when locating warehouse rental space and how to determine your space needs.

Determine Your Industrial Space Needs

The type of industrial property that you rent depends on the nature of your business.  Industrial properties generally fall into one of 3 categories:

  • Manufacturing space
  • Warehouse space
  • Flex Space in which you have a combination of office and warehouse or manufacturing

Each type of industrial property server different needs.  Warehouse space is primarily used to store and distribute products.  Distribution centers are a type of warehouse space used for product distribution, however it is not part of the assembly or building process.  Using warehouse space might require equipment to pack and label products to prepare for shipping.

Manufacturing space is where you create, build, or assemble products.  Depending on what you are manufacturing you may need to get special zoning or have specific build out needs such as reinforced flooring, particular clear height, or special power needs.

Flexible space will have a combination of the 3 so you can take care of all your warehousing, office, and manufacturing needs all in one place.

Overall before you start looking at industrial space you need to determine what your needs are.  Do you need office space?  Are you going to manufacture products? Do you need warehouse space to store, package, and ship your products?  Or do you need a combination of the three?

Finding the Perfect Commercial Industrial Property

There are plenty of online data bases to search for available industrial properties however be aware that A LOT of the data is inaccurate.  Your better off engaging a commercial realtor that can do most of the legwork for you and help you sort through the 1,000’s of spaces to find the perfect space.  In most cases their service does not cost you anything as they split a commission that is already being paid to the listing agent.

Before you start your industrial space search you need to figure out:

  • The max rent you can afford to pay each month
  • How much space you need NOW and 3 years from now since most landlords won’t do anything less than a 3 year term.  In some cases they want five depending on the existing shape of the space.
  • Your ideal location – Do you need to be close to the airport, major highways, customers, partners, suppliers, etc.?
  • What specific features you need – Do you need dock high or grade level loading, a specific clear height, outside yard space, offices space, special power such as 3 phase, reinforced flooring, 18 wheeler access, the ability to store vehicles overnight, etc.?

Once you have a clear picture of your exact needs you and / or your commercial realtor will search the market to find suitable spaces that match, call listing agents, landlords, and building owners to verify availability, asking base rents & estimated NNN, gather floor plans, etc..

industrial space rentalsTouring Commercial Industrial Spaces

Next you want to physically look at all the ones that you and your broker have confirmed that match your ideal needs.  They may look great online however it’s important that you visit them in person.  As you meet each listing agent make sure to thoroughly describe your needs to them to be sure that their space can accommodate your needs.

To stay organized make sure to take notes or hopefully your commercial real estate agent is doing so on your behalf.  You want to compare each property including:

  • Size
  • Asking base rent & estimated operating expenses (NNN)
  • Any other additional costs
  • Minimum lease term required
  • Who is responsible for what costs
  • Expansion options
  • Available parking
  • 18 wheeler access
  • Power available at the location (e.g. 3 phase)
  • Can the space be modified to suite your needs
  • Fire protection such as sprinklers
  • Etc….

If you like a location that does not exactly match your needs ask if changes can be made or can the space be remodeled.  It’s not always an option however worth asking.

Don’t just pick the first one that matches your needs.  Make sure you have looked at all of them that do match or can be made to match your industrial space needs.  The reason why is ideally you want to have at least 2-3 options that you like.  That way you can create some leverage and a little competition for your tenancy between them.  Also if another company leases a space out from under you OR one landlord is not being very negotiable then you have others to fall back on.

They key is to remain personally detached.  You might be excited about a particular industrial property however don’t let the landlord know that.  Keep your business glasses ON!

Again if you have options in your market it’s best to find at least 2-3 that could work.  Then request proposals and start the negotiating process.

Industrial Space Lease Basics

Net Leases – Most will be triple net leases (NNN).  This means that in addition to the base rent you will also be required to pay your share of operating expenses which will include taxes, insurance, and maintenance on the building or buildings portfolio.

Monthly or Yearly Rates – Landlords quote industrial rental rates differently.  Some quote a monthly rate such as $0.75 + $0.25nnn.  Or a yearly rate such as $8 + $4nnn.

Common industrial lease contract terms – When reviewing the industrial lease contract make sure you are clear on all the terms and conditions

  • Asking base rent and estimated nnn AND total monthly rent
  • Security deposit required
  • Length of lease term
  • Lease term start and expiration date
  • Yearly rent escalations (if any)
  • Party responsible for repairs & improvements of property
  • Party responsible for HVAC repair & replacement
  • Sublease rights
  • Inventory liens?
  • Renewal options
  • Tenant improvements
  • Option to expand
  • Option to break a lease
  • etc

The Bottom Line When Renting Industrial Property

Locating and renting industrial & warehouse space is a huge step for your business.  Be sure to hire a commercial real estate pro that knows the industrial market in your area, give yourself plenty of time to consider all your options, and hire an attorney to review the lease contract.  This will ensure that you have done everything you can to find and rent the perfect warehouse space for your business and that your business assets & legal rights are protected.

If you have any questions about austin warehouse or industrial rentals feel free to contact us at 512-861-0525

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