Five Things to Consider When Renting a Warehouse

Posted by Colliers on 7th September 2021 -

Transitioning from running a business from home to renting a warehouse to store your stock or run your operation from can be a daunting prospect.

Lease agreements on warehouse space are generally signed for a minimum period of three years, therefore it is hugely important to be aware of what’s involved before signing up to a new lease.

To help you find the right space and ask the right questions, Colliers’ industrial property specialist Tom Arnold offers five key points to consider when beginning a search for a new warehouse.

1. Location and access: When looking for a storage unit, the majority of occupiers require vehicle access for deliveries and unloading. Location and access will often determine the ease of this and can be vital in ensuring a smooth operation. Pay attention to local transport links including distance to motorway networks and A roads. Does the industrial unit have a large enough yard for loading/unloading? Is the access road wide enough for large vehicles? These are important questions to ask when reviewing the location and access arrangements.

2. Costs: Each location can have a different market rental level and expectation. It is worth reviewing several locations and the ‘quoting’ price of similar properties within these. Once you have an understanding of what is available and the rental cost of these, consider the condition of each, the age of the building and if there are any further costs including service or estate charges. Commercial occupiers will also have to pay business rates which is a tax on non-residential buildings in England and will need to be factored in when considering the full costs of premises.

3. Negotiation of lease: Once you have identified a suitable property, it is time to engage with the landlord or property agent to express an interest and begin negotiating a lease to rent the property. There are many things to consider when agreeing a commercial lease, including rent, lease length, rent inducements (can be by way of rent free periods to allow the incoming occupier a period to set up their operation), break clauses and any liabilities that will fall onto the tenant. If at any stage you are unsure on any of the details, it is recommended that you seek expert advice from a qualified professional who will be able to advise on all aspects of the process.

4. Heads of Terms: Once you have agreed a deal in principle, the landlord or agent will draft a document called Heads of Terms which contains all the key points of the agreement. This is not legally binding, however, it contains all the information required to draft the lease, which is drawn up by the appointed solicitors.

5. Exchange of contracts and completion of the deal: Once the Heads of Terms have been agreed and the solicitors have drawn up the lease, exchange of contracts can take place - which is when the agreement becomes legally binding. It is important that you are completely satisfied with the agreement before exchange takes place and if you are unsure about any elements, take advice from your solicitor and property agent before proceeding. Completion of the transaction will often follow shortly after exchange of contracts and at this point, you pick up the keys and you’re ready to go!