What Tenants Need to Know

Tim Tysk

Senior Director | Tenant Advisory

 

The Most Expensive Way to Find Industrial Space

Most searches for industrial real estate start the same way: someone types “warehouse space for lease near me” into Google and starts calling listings.

For a growing company, that’s often the most expensive way to approach the process.

First of all, you may never find the building that best supports your operation through an online search. And even if you do, the broker listed on the property is representing the landlord—not you. Their responsibility is to protect their client’s interests, not to find the best solution for your business.

Commercial real estate is one of the largest fixed expenses most companies carry and one of the easiest long-term commitments to get wrong. That’s why the process should begin with understanding your operation, not browsing listings.

 

Read Next: 5 Signs It’s Time to Renegotiate Your Commercial Lease Before It Expires

 

Start with Your Operational Requirements

Before evaluating a single building, define what the facility needs to accomplish.

Questions to consider include:

  • What clear height do you require?
  • How many dock doors are needed?
  • Is the available power sufficient?
  • Can the floor support your equipment?
  • Is there enough trailer parking?
  • Does the sprinkler system meet code requirements?

Beyond building specifications, consider operational realities:

  • Can the facility support your throughput?
  • Is there room for future expansion?
  • Can you add another shift if needed?
  • Is the workforce you need within commuting distance?

A building can look perfect online and still create major operational challenges after move-in. It’s like shopping for a house, looks great in the ads but smells like cats and doesn’t feel right when you walk in.

 

 

Why the Closest Location Isn’t Always the Best One

Location decisions are often driven by convenience. For industrial businesses, however, the real equation is labor and logistics.

A property twenty minutes farther away may provide:

  • Better access to qualified employees
  • Improved highway connectivity
  • Lower transportation costs
  • Easier long-term hiring

While lease rates receive much of the attention, labor and freight costs often have a greater impact on total operating expenses over the life of the lease.

The right location isn’t necessarily the closest one. It’s the one that supports your workforce and supply chain strategy.

 

The Cost on the Flyer Isn’t The Real Cost

One of the most common mistakes tenants make is focusing on the number on the listing. The advertised lease rate is only part of the equation. Operating expenses, annual escalations, maintenance responsibilities, and landlord concessions can all significantly affect what you’ll actually pay.

Factors that influence the true cost of occupancy include:

  • Operating expenses / common area maintenance (CAM) charges, and taxes
  • Annual rent escalations
  • Responsibility for repairs and maintenance
  • Tenant improvement (TI) allowances
  • Free rent periods
  • Dock, office, or facility upgrades

Two buildings with the same asking rate can produce very different financial outcomes over the life of a lease.

 

Timing Creates Leverage

Many companies underestimate how long an industrial real estate project actually takes. Good industrial space goes fast, and the right building for a growing business is rarely sitting empty waiting for you.

Even after identifying a property, the factors below can significantly extend the timeline:

  • Lease negotiations
  • Permitting
  • Construction and build-outs
  • Equipment installation
  • Relocation planning

Best Practice:

Start evaluating options 12 to 18 months before occupancy is needed. Companies that begin early have options. Companies that wait are often forced to compromise.

 

Why Tenant Representation Matters

This is the step many businesses overlook.

The listing broker is hired to represent the landlord’s interests. A tenant representation advisor works exclusively on behalf of the occupier.

That difference can be significant because tenant representatives often:

  • Access off-market opportunities
  • Understand market concessions
  • Benchmark competing properties
  • Negotiate more favorable lease terms
  • Align facilities with operational requirements

In most markets, landlords pay brokerage commissions regardless of whether tenants have representation. That means having an advocate on your side often comes at no additional out-of-pocket cost.

 

The Bottom Line

Finding warehouse or industrial space isn’t hard because there aren’t enough buildings, it’s hard because the whole process is built around the landlord, and most companies only run it a couple of times in a decade.

My entire career is built on helping clients find industrial space, whether in the Twin Cities or across the country. You don’t need to have a move figured out yet, starting the conversation early is often the most valuable first step.

 

TIM TYSK, Senior Director

c: (651) 470.5231  |  ttysk@carlsonpartnersllc.com

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