Leasing Definitions: Definition of Industrial Space

Glossary of Commercial Lease Terms—Industrial Space

Commercial Office Space
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Commercial property is typically categorized as retail space, office space or as industrial space. The terms "commercial industrial space" or "industrial property" refer to that which is used for manufacturing, storage or other industrial purposes. These properties can include both heavy and light manufacturing buildings, research and development parks, factory-office multiuse properties, factory-warehouse multiuse properties, and industrial parks.

Industrial buildings are often warehouses or other large, unfinished spaces that can be used strictly for purely industrial purposes. However, many industrial spaces are converted to serve as more traditional office space, or as a combination of storage/industrial/business use. Industrial park spaces are also now being used by many retail businesses.

To attract a wide variety of businesses, many industrial parks have now become more upscale so they can be hard to distinguish from retail and business parks, on the surface at least. But for purposes of zoning and other issues, they tend to stand alone. 

What You're Renting

Depending on your purposes and the nature of your business, you typically would not be renting simply a cavernous empty space. Many industrial spaces include office areas and other smaller rooms that can be used as shops or laboratories. This type of industrial space is typically referred to as "flex space" and is often utilized by smaller businesses, such as auto dealerships where the showroom may take up the bulk of the square footage but offices, restrooms and perhaps even a garage abut it.

Flex space contrasts with predominantly single-room or single-space warehouse or space dedicated to machinery and manufacturing.

The Pros and Cons of Industrial Space Leases

Industrial space leases tend to be long term, for as long as 10 years. This can be beneficial to the tenant because who really wants to move such an operation any more frequently?

A longer lease also lets you avoid even the possibility of having to relocate if more frequent negotiations on a series of short-term leases don't work out. 

Industrial spaces often cost more to rent, however, and they tend to be "net leases," which means that you and your business will probably find that you're responsible for a slew of other costs outside your base lease payment that would otherwise fall to the property owner or landlord. These costs may include insurance premiums as well as maintenance and expenses associated with repairs that become necessary through no fault of your own. And, of course, the expense of various utilities will probably fall to you. Heating, ventilation and air conditioning costs can be considerable with this type of building.

Proceed Cautiously 

Make sure you get all the details of what you're responsible for paying for in writing and clearly outlined in your lease. And don't overlook the possibility of negotiating a better deal. If possible, find out how long the owner or landlord has been sitting on an empty industrial space. Tenants for this type of property aren't as readily abundant as those for other properties, so this may afford you some leverage.

 

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