LEASE AGREEMENT REFERENCE GUIDE 200: STRATEGIES FOR INDUSTRIAL LEASES $24.95
Industrial Tenants Come Of Age
It is safe to say that industrial tenants have become far more sophisticated in their approach to leasing industrial space for their operations. This results in part from their exposure to high quality industrial parks, and from their awareness of the impact real estate has on their bottom line. Although industrial tenants historically would either buy or lease a free standing site for industrial, manufacturing or warehouse operations, the industrial park permits a tenant to obtain a suitable site for its operations, and often allows the tenant to have adjacent administrative offices in a pleasant environment.
Best of Both Worlds
High quality industrial parks usually contain a variety of compatible uses, such as industrial and warehouse uses, light manufacturing uses, office, research and development, and limited commercial and distribution type facilities. This harmonious mix of uses is one of the main reasons industrial parks have enjoyed relatively low vacancy rates in many markets compared to the glutted first class office space component in the same markets.
Industrial parks have really been the only game in town for a tenant who needed at least some good space for light manufacturing or for industrial operations not permitted or feasible for an office building. Further, such tenants have realized that they can save the occupancy expense of having separate manufacturing and managerial or sales locations. Why not combine them, and be in a park that's just as attractive as an office park anyway?
In addition to a fairly pleasant environment which many industrial parks offer, parks frequently provide special services for industrial tenants, including heavy electrical and gas capacity, CC&Rs that permit truck docks for loading and distribution facilities (often located at the rear of the building), and rail spur transportation. Many buildings developed on a speculative basis in such parks have features which are particularly attractive to industrial tenants such as specialized security services, higher floor to ceiling clearances, specialized heavy duty freight elevators, and sophisticated instrumentation to regulate or monitor sound, humidity, temperature and vibration. Still others have supply sources for consistently pure water and have, or are adjacent to, disposal sites for chemical wastes.
But as industrial parks have grown more sophisticated, so have industrial tenants. Tenants are increasingly knowledgeable concerning the provisions of industrial leasing that cost them money, and the impact of CC&Rs and industrial park rules and regulations which impede their operations, or make them more expensive. Industrial park CC&R's and rules and regulations are also covered in this LARG.