We’ve written before about the fact that an industrial real estate agent is contractually obligated to represent the best interests of his clients. But what isn’t as well understood is that it’s the clients themselves who hold all the cards necessary for the agent to do a thorough, successful job. Clients can set their agents – and themselves – up for the best possible outcome by being honest and direct in all aspects, from the very beginning. This is the information your agents needs before the industry property search begins.
The industrial market here in northern Nevada is holding steady. Our second quarter market report sums it up nicely – “If our growth appears a bit slowed, it’s coming down from all-time record highs.” This is useful information for industrial tenants-to-be. Term length requirements from local landlords remain in the three to five year range. If you’re looking for a term length under that timeframe, your agent needs to know upfront. And be prepared for limited options.
Your Financial Status
Most landlords require prospective tenants to submit financials together with an LOI (offer to lease). If your company is a start-up or has a subpar financial status, a personal guarantee or hefty security deposit may also be necessary to secure your desired space. Be clear your agent about your financial situation from the start. Don’t set up a scenario in which you or your agent will be backtracking. Laying all your cards on the table upfront puts your agent in a much better position for negotiations.
Plans for Use & Any Tenant Improvements
Generalities at the beginning can be a disaster at the eleventh hour. If it’s possible, give your agent photos or a tour of your existing operation. At the very least, offer a very specific explanation of how you plan to use a facility. Most property owners are open to light manufacturing needs, but failure to disclose specifics can be problematic. Give your agent a clear understanding of your needs, and you’ll save aggravation later.
Likewise, it’s a best practice to compile a list of tenant improvements with your agent before an LOI is submitted. Your agent can reference your photos or that walk-through of your existing operations to complete the list. Once a landlord has agreed to terms and request, there’s little room for renegotiation, so get out in front of this.
Your Real ETA
On larger industrial leases, negotiations often take months. If you have a true time constraint, your agent can only create proper urgency if he’s made aware from the beginning. We advise starting your property search at least six months – and that’s at the short end – before your operational move-in deadline.
The best strategy is simple. Practice complete transparency with your industrial agent. He or she can only be expected to manage potential obstacles by being made aware of them first and preparing for them second. Being straightforward and direct is truly the smartest way to ensure the smoothest transaction.