Finding the ideal commercial space that aligns with your business needs and budget can be a challenging balancing act. You want room to grow without overextending finances. Follow this comprehensive guide to choosing the right commercial real estate and negotiating the best deal.
Define Your Unique Requirements
Don’t start touring potential spaces until you’re crystal clear on your must-haves. Carefully consider:
Location – What areas or buildings make the most sense? Do you need proximity to highways, foot traffic, labor pool, vendors, etc? Take zoning restrictions and local regulations into account too.
Square Footage – Accurately estimate how much space you need for staff, operations, inventory, growth, etc. Allow for some buffer room. You can always partition off excess temporarily.
Parking – Calculate parking needs for employees, customers, deliveries, etc. Are dedicated spots included or will you pay for spaces?
Accessibility – Determine if ADA compliance is necessary to accommodate employees or customers with disabilities.
Lease Type – Should you do triple net (NNN), modified gross, or full-service? This significantly impacts operating expenses.
Tenant Improvements – Will the space need build-outs like walls, lighting or HVAC? Understand who handles and pays for this upfront.
Clearly defining these needs upfront saves time by narrowing your focus to properties that fit.
Utilize the Right Resources in Your Search
Now it’s time to start searching! Use both online listings and on-the-ground strategies:
- Check sites like Loopnet and CommercialEdge for available properties. Look for trending lease rates in your target areas.
- Work with a broker like Moey Inc who can access exclusive offline listings and introduce you to amenable landlords. Their expertise is invaluable.
- Physically drive your target markets, especially for retail spaces. Look for vacant signage. Follow up right away on promising vacancies before they hit the mass market.
- Talk to business owners and landlords to get word-of-mouth referrals.
- Sign up for listing alerts and check frequently. Newly listed spaces get snapped up fast.
Cast a wide initial net using these strategies. Visit your top prospects in-person.
Analyze the Financials
Thoroughly review proposed terms and calculate all occupancy costs including:
- Base monthly rent
- Operating expenses – CAM fees, property taxes, insurance
- Utility costs and who pays
- Security deposit amount
- Parking fees if applicable
- Responsibility for maintenance and repairs
- Cost of any needed tenant improvements
- Moving costs
Project total costs over the full lease term, factoring in rent increases. This helps you determine if the space truly aligns with your budget or needs adjustment.
Negotiate the Best Possible Terms
The quoted rent and terms are often negotiable, especially if the property has been listed for a while. Use these strategies to negotiate the best deal:
- Ask for a lower starting rent with gradual increases. Offer to sign a longer lease in return.
- Request 1-2 months of free rent at lease commencement.
- Limit future rent escalation amounts. Push for a fixed rate rather than automatic increases.
- Ask for a tenant improvement allowance if build-outs are needed.
- See if the landlord will cover needed repairs or maintenance rather than passing on costs.
- Request reduced security deposit terms.
- For retail, try to negotiate capped CAM fees, so you’re not paying exorbitant overages.
Never accept the initial offer at face value. Politely push for better terms while highlighting why your business is a stable, desirable tenant. If your request is reasonable, landlords want to fill vacancies and will often compromise.
Inspect Thoroughly Before Signing
Never sign a lease without thoroughly checking over the premises to avoid major surprises down the road. Look for:
- Needed repairs or maintenance issues
- Faulty HVAC, plumbing or electrical systems
- Signs of pests, water leaks or structural damage
- Compliance with all local building codes and zoning laws
Build in time to complete inspections and negotiate fixes before taking occupancy.
Review the Fine Print Carefully
Have an experienced commercial real estate attorney review the lease agreement in detail before signing. They can catch hidden costs, unwelcome terms, or compliance issues. Spending on proper legal advice now saves major headaches later.
Finding the perfect space that meets your needs without breaking the bank takes time and diligence. But follow these steps and you’ll secure ideal commercial real estate for your growing business. Partner with a trusted broker like Moey Inc for expert guidance throughout the process.