If you are looking to relocate your business or start one up and need to lease commercial property, the most important item on your checklist should be location.
Location is Critical!
Pinpointing the right place to be now and for the foreseeable future can make or break your business success. While this may sound like a no-brainer, businesses often come and go prematurely mainly because the commercial space for rent just was not the right place for a particular type of industry. Focusing on the “where” from the very start is a crucial first step.
4 Key Considerations When Planning for Your Commercial Lease
Before you do any research for any property, take the following into account as part of your business planning:
1. "Share" Consumer Spending: Is yours the type of business that thrives on foot traffic generated by other companies? Businesses like ice cream parlors, take-out pizza places and small family run restaurants all located in one plaza can rely on each other to “share” consumer spending. While a customer is picking up a pizza for dinner, he or she may also want to take some ice cream home for dessert.
2. Proximity to Similar Businesses: Many industries looking to lease commercial property cluster around other like or similar businesses. Think about a scenario whereby several car dealerships locate along a stretch of highway, or banks, drug stores and fast-food places like McDonald’s and Burger King all fairly close to each other. These industries build near one another either to give consumers more choices or to make it more convenient, which is the case in plazas where you may find an eye doctor, a radiologist, a family doctor and other medical-related firms. If a person can have her eyes checked and then see her family practitioner all in one area, that cuts down on travel time and frustration.
3. Anchor Stores: Take a look at supermarket plazas where a major grocer is the anchor tenant. These locations usually make it a great place for business such as Chinese takeout, dry cleaners, hair stylists and cellphone franchisees. People are going shopping for food and then they may want to buy from your nearby enterprise if your offerings are in line with their lifestyle.
4. Convenient Parking: How will your customers be arriving to your business? Are they driving, walking or on bicycle? When you lease commercial property, be sure to have adequate parking if your target market is most likely driving to your place.
Smaller Businesses Can Select Lower-profile Locations
Some small businesses do not need to worry about customer traffic because their business model relies on them going to the customer.
A financial planner often visits with clients at their place of business, at home or in a restaurant when they give a free seminar to prospective new clients, for example. So they can afford to select a place off the beaten path for the mot part. That may also give them an opportunity to save some money on their commercial property lease because they do not need a fancy or spacious property in heavily traveled locations the way restaurants, grocers, gas stations and so many others do.
Commercial Lease Option for Micro-Businesses
Are you starting a micro-business of just one or two employees? If so, think about an office building that caters to these types of start ups. Commercial properties in New Jersey and elsewhere for example have buildings with office space dedicated to companies just starting out who need to lease commercial property.
These so-called “incubators” have conference rooms, kitchens, administrative areas, receptionists and small meeting areas that tenants share, giving new companies the resources they need for a small fee while they concentrate in building their book of business.
Maybe after a year or two the small company can grow and move to a larger space.
Getting Help WithYour Budget
What is your budget? How much rent can you pay? Have a good idea of what you can afford to pay on your lease before physically touring any properties. If your rent is going to be high, and you plan to pass that along to your customers, be sure you are located in an area that has the right demographic nearby to support your costs.
There are many opportunities for business loans whether through traditional financial institutions or organizations such as the U.S. Small Business Administration. Another good place to look for help is from local SCORE chapters. The nonprofit Service Corps of Retired Executives (www.score.org) helps businesses from start up to growth and expansion offering a full range of business advice, including how to set up a budget.
Find a Real Estate Pro
With these basic considerations in mind, it's time to find a real estate professional who can help you lease commercial property that makes the most sense for you. Get a list of potential locations, visit them and begin cutting down that list based on your budget and where you think is the best spot for your business. Negotiate the terms of the lease, and don't sign anything that makes you feel uncomfortable.
Hire a Commercial Real Estate Attorney
You will likely need an attorney to help you go through the lease, which can sometimes be 200 pages or more. Identify items that may be a problem in years to come.
For example, Property.com recently became aware of a lease that had wording about how a parking lot behind the leased building may be sold at any time if the office building adjacent to the lot was sold. That meant the small business would have to give up a dozen or more parking spaces, meaning employees would have to walk quite a distance to and from their vehicles to get to work.
Of course there are many other considerations when looking to lease commercial property, but making “location” your number one concern is essential. Examine your priorities, do your research and have a trusted professional by your side so you're not alone. You'll find thousands of commercial properties for sale or lease at: www.property.com.
Should I Buy or Lease Commercial Property?
View the video for good information about whether leasing commercial property or buying is the way to go. The presenter, Davide Pio, gives a great example about major businesses and how they go about determining their commercial property needs, and how small businesses can put that information to work for them.