Don’t Break the Bank – Featured in Progress Magazine
Leasing commercial real estate may seem simple, but overlooking a few factors could both cost you financially and cause missed opportunities.
Is your lease up soon or are you starting a new business? If so, there are some things you should consider in order to avoid the heartburn that often accompanies a renewal, relocation, or start-up. Leasing commercial real estate may seem simple, but overlooking a few factors could both cost you financially and cause missed opportunities.
One of the most basic elements of starting or maintaining a business is the physical space. That space conveys a message about your brand and company culture to the marketplace, plays a role in employee productivity, and can be a draw for new hires. Here are a few points to consider:
Start early. Anywhere from 18 to 24 months before the end of your current lease term or the commencement date of the new venture, in fact. This gives sufficient time to analyze all potential options (even if they aren’t built yet), to allow for internal approvals as required, and to secure financing, plus it leaves plenty of time to negotiate. You don’t want to get into a sticky situation where you’re forced into a corner (perhaps literally!) because you’ve run out of time.
Study the geography. Throw out conventional thinking about neighborhoods. Traffic patterns for clients and residences for employees evolve more rapidly each year. This means that where people conduct their retail purchases and the length and type of their commute to and from work are moving targets. Some areas are on the rise, and some are declining at the expense of others. Look for sites that optimize car and foot traffic (retail), trucking (industrial), and employee access (office).
Clearly define your physical/financial needs. Space planners can help crafting size requirement; ceiling heights, building system capacities, and amenities should all be part of the decision. The inability to expand could force an expensive relocation mid-lease, and poor air quality and lack of convenient food and personal services can drive employees and customers away. Having a lender or capital source is key, since there will be some combination of fit-up costs, moving costs, and FF&E (furniture, fixtures, and equipment).
Tap expertise. Landlords are generally honest and forthright, but keep in mind that they’re running a business and protecting their interests, so consider finding a commercial real estate advisor to negotiate your financial and non-financial terms. You’ll also need to hire a lawyer to review the lease contract.
Corral the chaos. Whether you dedicate an internal staff member or hire a certified professional to manage your project, many small details can disrupt your business if they’re delayed or done incorrectly. Draft a project-management plan; it takes a number of vendors to set up, relocate, renovate, or expand a business or put a contract in place.
Bill MacAvoy is the managing director and owner of Cushman & Wakefield Atlantic, the region’s largest commercial-only firm.