Leasing a warehouse space

By
Real Estate Broker/Owner with Steve Shire- CRE Broker | Austin, Texas 0524917
Leasing a warehouse space When you lease a warehouse, there are specific things you are going to need to do as a tenant, here is a summary of what is involved in the lease execution process regarding a new lease on a warehouse space. Offer letters for a warehouse space An offer letter is titled a LOI or letter of intent, this is a negotiation instrument that outlines all the terms and conditions of the warehouse lease before a lease contract is drafted and subsequently executed.

Leasing a warehouse space

When you lease a warehouse there are specific things you are going to need to do as a tenant, here is a summary of what is involved in the lease execution process regarding a new lease on a warehouse space.

Offer letters for a warehouse space

An offer letter is titled a LOI or letter of intent, this is a negotiation instrument that outlines all the terms and conditions of the warehouse lease before a lease contract is drafted and subsequently executed. During this phase of a warehouse lease your financials would be required. Financials can consist of a simple credit app or a more detailed analysis to include the past 2-3 years of your tax information.

Security deposits

The first month's or the last month's rent is the security deposit as a rule, it all depends on the credit worthiness of the tenant. This is checked by the landlord during the LOI or letter of intent stage before the lease is drafted. Once your credit is checked a determination is made what the security deposit shall be equal to.

1st Month's rent in advance

When you enter into a new warehouse lease, the first month's rent is paid in advance. This can be a bit confusing for some tenants with a new  warehouse lease. So here is how it would work for you in the following example: Tenant receives 2 months of abated rent and has paid their first month's rent in advance. Let's say you execute a warehouse lease for May 1st - that means you would have May and June abated, you paid for your first month's rent so July is covered. Your next lease payment would be due August 1st in this example.

Insurance requirements

Insurance on a warehouse lease is considered liability and lists the landlord as an additionally insured party. Typical liability insurance starts at $1M and goes up to $2M, there may be a need for higher liability insurance if a tenant uses hazardous materials within the warehouse space due to the possibility of fires etc. Costs of liability insurance for warehouse space run approximately $350, per year to cover $10,000 worth of content along with a $1M liability.

Moving into a new warehouse space

As a new tenant in a warehouse space- you will need moving help. You will want to make sure you utilize the tools we provide you to help you with your move. There are many facets to moving and you will want to make sure you have them all completed to make your move is smooth.  Keep in mind leasing a warehouse has several attributes a tenant has to be aware of, utilizing a Commercial Real Esate Broker like Shire Commercial  alleviates the issue of not knowing about these key items.

Comments (1)

Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Yes to this post, its host and a good subject matter for those they need to know

Jan 09, 2014 02:02 AM