Are you part of the leasing dating game?
Industrial – Workplace February 2019
Leasing industrial business space is a bit like a dating game.
Once you have found the right location for your business, the courting begins. You, as the tenant, will know what you are looking for in a landlord and the landlord will have a best-case-scenario tenant profile that they’ll be benchmarking you against.
A strong and respectful tenant-landlord relationship cannot be underestimated in an evolving and competitive industrial landscape.
The industrial sector of the property leasing market is tight. Demand is exceeding supply and landlords can believe they are calling all the shots.
But it is a two-way street and it pays to be clear about expectations, responsibilities and communication lines from the start. You should feel comfortable that the owner of the property – or the representative handling the management of it – has your business’ interest at heart, although naturally it’s at an arm’s-length.
Think of the landlord like a business partner – what qualities are important to you as you propel your business forward?
• Respect – for your privacy, for the terms of the lease
• Reliability and dependability – someone who does what they say they will do in a timely manner
• Confidence – in your business, in you as a business owner, in the industrial sector broadly
From the landlord’s side of the equation – consider what they would be looking for in an ideal world.
• A tenant that is successful and has a stable business
• A tenant with a good rental track record
• A tenant that will enhance the property through careful occupation and pride
• A tenant that is a good fit with existing occupiers
• A lease that meshes with their return-on-investment goals – most industrial landlords aim to be hands-off property owners, have their property fully-tenanted with good leases locked in place, and with an expectation that over time, their returns will increase.
There is clear overlap in many of these tenant versus landlord expectations and ideals and the ultimate outcome is a symbiotic relationship that benefits both parties.
In today’s market, where industrial property is in short supply, you’ll be wanting to have security around occupation of a property once you find one that fits your check list.
And that’s where negotiating a sound lease comes in – one with flexibility should you need it, and assurance of lease term for short, medium and long-term business planning and budgeting.
So how can you, as a tenant, intertwine your business goals with those of your landlord at a property level?
• Consider getting a bank guarantee over your lease to give your landlord some added confidence and certainty
• Be a proactive tenant and be mindful of the make-good clauses within your negotiated lease. Attend to maintenance issues in a timely manner and be aware of both your own and your landlord’s rights in regards to structural work on the building
• Pay on time
• Take renewal early and reset the rental levels as an increased term creates value for the landlord
Let the “dating game” begin…
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