How to choose an industrial bay

Most bad industrial leases are not the result of a bad negotiation. They are the result of a requirement that was never properly defined, so the wrong space was shortlisted and everything after that was damage control.

1. Define the requirement before you look

Write these down. If you cannot answer one, that is the first thing to resolve.

• Area needed, derived from storage and people — see bay sizes.
• Clear height needed, derived from your racking plan.
• Loading: how many doors, dock or grade, and what vehicles arrive.
• Power: amps, phase and voltage, from your equipment nameplates.
• Heating, ventilation and any exhaust requirement.
• Office area and how many people are in it.
• Yard, outdoor storage and parking stalls.
• Location constraints — staff commute, customer access, truck routes, proximity to your suppliers.
• Your intended use, in the words a municipality would use for it.
• Timing: when you must be operating, working backwards through fit-out and permits.
• Budget: total occupancy cost, not net rate.

2. Check the use before you fall in love with a space

Confirm your use is permitted in that district, for that specific site, with the municipality. Do it early. It is the cheapest question you will ask and the most expensive one to get wrong. See zoning and permitted uses.

3. Inspect properly

Take a tape or laser measure, a phone, and this list. Photograph everything, including the panel label and the door plates.

1. Measure the clear height at the door, mid-bay, under the sprinkler main and under the lights.
2. Measure the clear opening of every overhead door.
3. Photograph the electrical panel, the main breaker and the panel schedule.
4. Find the gas meter and the heater, and check the service tag.
5. Look for the sprinkler main and ask what the system was designed for.
6. Walk the slab, looking at joints, cracks and the area inside the door.
7. Locate every column and note where it sits.
8. Find the drains and ask what serves them.
9. Go outside and check the apron depth, the slope and the drainage.
10. Look at the parking, the signage position and how a truck would actually reach your door.
11. Look at the neighbours. In multi-tenant industrial you inherit their noise, their smells and their parking habits.
12. Visit at the busiest time of day, not just when it is quiet.

4. Ask the questions that are not on the flyer

• What is the current additional rent estimate, and what were the last two years' actuals?
• What is separately metered?
• What was the sprinkler system designed for?
• Has the roof been replaced, and when?
• What capital work is planned?
• Who is responsible for the rooftop unit, the overhead door and the slab?
• How is the area measured, and is the mezzanine included?
• What restoration will be required at the end of the term?
• Is the use permitted or discretionary?

5. Negotiate the right things

The rate matters, but over a five-year term the repair clause, the restoration obligation, the operating cost definition and the assignment clause can each move more money than a modest difference in rate. Spend your negotiating capital where the exposure is.

6. Get advice

Have a lawyer review the lease. Where the fit-out is significant, have a designer look at the space before you firm up. If you are working with a broker, be clear about who they act for — a listing broker acts for the landlord.