The Basics of Leasing Industrial Real Estate

  • August 22, 2017
  • Industrial

Leasing industrial real estate is a much more complex process than say leasing an apartment, or other commercial space like retail. That’s because when you lease industrial real estate you often have to create a highly tailored lease agreement that permits the operation of the business that will utilize the space.

Even before you work with a commercial real estate Broker to help construct a lease agreement that looks out for your interests, you will first need to determine your business needs, choose an industrial property type and locate the space.

These steps are important and shouldn’t be rushed. If you do it right you will knowledgeably acquire the industrial real estate property that will cause minimum disruption to your business and set it up to run smoothly for the length of your lease.

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Timing is of the Essence

industrial real estateKnow this, leasing industrial real estate is not an overnight process. When moving into your first industrial space, or relocating to a new facility, the process to negotiate an executed lease agreement can take about 6 to 9 months to complete.

Dependent upon the size of your business and the current market conditions in your area, most commercial experts will advise their clients to begin the locating and leasing process around 12 to 18 months before planning to move or, in the case of relocation, before their current lease expires.

There are many negative consequences to starting the leasing process late and rushing through the steps. These include making inaccurate space requirement estimations, missing out on current and future opportunities, agreeing to poor lease terms, lacking space for future expansion, and many more.

Determine Your Industrial Real Estate Space Needs

Morale of the above story is to take your time…and plan ahead! The first step in the industrial real estate leasing process is to properly and accurately determine the space needs for your business. This is highly important. By devoting time and effort to this planning phase, your business will 100% benefit financially and strategically.

Here are some considerations to take into account when determining your space needs…and remember think about current and FUTURE scenarios.

  • Do you have a business that is growing or downsizing? Is this in terms of mechanical/equipment needs or labor pool? Both?
  • What do you see as your facility requirements in the next 3 years? 5 years? 10 years? (Align with length of lease term you desire)
  • Is acquiring or merging with other businesses a potential outcome in the near future?

Choose an Industrial Real Estate Property Type

industrial real estateOftentimes many businesses will discover that a few different industrial real estate property types can meet their needs. In order to conduct the most accurate and thorough search, it’s important to nail down the industrial space that will best fit your business needs.

Industrial real estate is generally offered in three property categories: warehouse, manufacturing and flex (mixed-use). Even within those categories there are different types of industrial space.

  • Warehouse: Used for storage and/or distribution.
  • Manufacturing: Used for the creation, conversion or assemblage of materials.
  • Flex: A mixed-use facility that allows for multiple businesses of single use, or a single business for multiple purposes. Most often this is industrial space that also includes offices and/or showrooms.
  • Distribution: A warehouse that specifically specializes in the distribution of goods.
  • Service Center/Showroom: A flex property that is typically comprised of repair facilities and a showroom.

Being Your Search Online for Industrial Real Estate Listings

Now that you have determined your space needs and the type of industrial real estate best suited to your business, it’s time to locate your perfect property. The first step in the process is to hop online and start searching for properties in your area.

This part of the process is great because it provides an initial snapshot of what is currently available, and starts putting the pricing you will encounter into perspective. Not only does this begin to form an accurate and realistic budget, it solidifies many of your space requirements as well. Looking at numerous floor plans and features has a way of really nailing down the industrial space “must-haves” and the “I-can-live-without’s”.

Always Step One: Find an Experienced Industrial Broker

If you are thinking about, or planning, a move into a new industrial real estate facility do yourself a favor and work with a professional commercial Broker. Critical to the process and achieving a successful outcome, a Broker will not only find you the most listing options, they will provide expert insight into your market, assess the financial implications of different properties and negotiate a lease agreement that protects your interests. If you are seeking industrial real estate properties in or around Baton Rouge, then please let the team at SVN | Graham, Langlois & Legendre help achieve your goals. Contact us today to get started.