Why Now Is the Right Time to Evaluate Your Industrial Space
This is the question that should be on your mind if you are one of the thousands of industrial tenants who have leases expiring in the next 2 years. Market conditions have changed drastically since lease rates and sales prices peaked in late 2022, and there are more quality spaces available now than there were when you signed your last lease.
Vacancy across Orange County is well off its record low and landlords are more willing to offer concessions to secure tenants faster and reduce the lost income that comes with protracted vacancy. So, the more up to speed you are regarding current market conditions, the better your next leasing decision is likely to be even if you end up staying at your current location.
We make sure you have a full understanding of the market before looking for space is even discussed. Moving is not always the best decision, especially if your current space still allows you to operate efficiently. Even if you have significant time remaining on your lease, your landlord may be willing to consider renegotiating the terms to hedge against future vacancy.
Perhaps there is even a way for you to upgrade your space and lower your occupancy cost at the same time if your landlord has other available space in inventory. These are real possibilities, but unless you know your options, you can’t make the best decision for your business.
Step 1: Evaluate How Your Current Space Supports Operations
Here are a few things you can do to get the process started:
First, walk your space with a keen eye for how it fits the flow of your operation. Ask yourself, if this were the perfect space for my business, how would it be different? Would you be more efficient with a space in a different location or configuration? Are you wasting space? Are you losing business due to a lack of capacity?
Step 2: Review Your Lease and Understand Your Position
Second, review your lease. This is another step that we can help you with. In our experience, most tenants don’t fully understand the financial and business points of their lease document. Once signed, they file it away and get back to business, unaware of the benefits and hazards of the document to their business going forward.
In short order, we can abstract your lease and brief you on important elements, including those that could improve your position with your current landlord. Have rent escalations and operating expenses been calculated accurately? Are there any options coming up that are time-sensitive? Are you receiving all the services the lease calls for? These and other questions could be significant in terms of developing your overall strategy.
Step 3: Explore Available Market Opportunities
Third, go look at what the market has to offer. Just walking through different spaces is a great way to visualize improvements to your operation. If you’ve been in your existing space for a long time, you may not be taking full advantage of technical innovations and advanced equipment designed to increase efficiency. Ask yourself, how has my business changed since I moved into my current space, and how do I expect it to change further in the next few years?
Maybe you would be better off in a smaller space, but with higher ceilings, which you could combine with a new racking system. Or, maybe you could outsource your distribution function to a 3PL operator to save on space, payroll expense, and materials handling equipment. Simply put, there’s no downside to opening yourself up to possibilities that the day-to-day grind of running your operation keeps you from seeing.
Making an Informed Real Estate Decision
To ensure that the right decision is made, we offer our services with no strings attached and ask only for the opportunity to earn your business by exceeding your expectations. Your only cost is a small investment of your time. We do the heavy lifting because that’s what we are in the business to do. Our team has the experience and resources to assist you in becoming fully informed and to move forward with confidence, whatever that decision might be.