Business Property | Office Lease Questions | Business Property Types
Question to ask yourself before buying or leasing property
If you are considering leasing space for your business, here are some things to look for and some questions to ask before you sign that document:
How Much Space Do You Need?
Decide on the maximum amount of space you will need for your business operation. Agents love to show you large spaces and suggest that you can "find something to do with the extra space." But unless the space can bring you additional income, it is more money you have to pay each month for space you aren't using. Stick to your limits on this one.
An example, private offices range from 120-200 square feet, workstations 36-80 square feet, file areas 12 square feet, reception areas (with seating) 350 square feet and conference rooms (seating 10-12 people) 200-375 square feet.
If you are leasing a store, you may want to consider the size of your stock, as well as the size of your displays and dressing rooms. No matter what business you are in, you'll probably also need storage and cupboard areas, a bathroom, maybe a mailing room, or even a kitchen.
It's best to add up everything and come out with a rough square footage estimate along with a list detailing the kinds of space you'll require both now and in the near future. When deciding if you can afford to lease a space, determine the total amount it will cost you to move in and to maintain your lease plus the amount of money it will take to renovate the space so that it will meet your needs. Is it affordable? If not, look for another space.
Who Pays for What?
Ask specifically what is included in the lease and what is not included. Some costs that may or may not be included in the lease are utilties, property taxes, and maintenance (snow removal, lawn mowing).
Is There Enough Parking?
Depending on your type of business, you may have many customers coming to your business. Is there parking for employees? Is there enough parking for customers? Is there enough handicapped parking?
What Restrictions are in the Lease?
Restrictions might include use of the space in the evening and on weekends, signage size and placement, and subletting (allowing someone to use part of your space).
Considering Subletting?
Because many landlords charge a hefty security deposit - especially to young companies who haven't yet proven themselves - sometimes it's far more cost-effective to sublet space.
A business owner can sublet in one of two ways: taking over part of an existing office (usually one or more private offices) and sharing facilities (like the reception area, kitchen, conference room, photocopier, bathroom, etc.) with another business. Sharing office space can provide many cost-saving advantages. It can also help in terms of business referrals, if it is logical for the other business to refer you.
The other way a business owner can sub-lease is to sublet an entire space from a business that has moved to another floor or building (or out of the area entirely). Not only will you relieve yourself of the responsibility of a security deposit, but you may see a substantial difference in your rent. If your lessor has moved but is still under contract for the space you want, they will be looking to cut the costs of paying rent for two locations. Use this to your advantage and haggle. However, keep in mind that subletting is rarely long-term.
Finally, office furnishings and key architectural elements are often included as part of a sub-lease, which can be another cost -saving benefit.
Who are the Neighbours?
Check out the other tenants in the building or strip mall to make sure none are in competition with you or would be undesirable. Ask if you can have an exclusive on your type of business, to keep competitors out.
What Happens if You Break the Lease?
This is an important question. Find out the penalties for breaking the lease. You might want to look elsewhere if the penalties are too high.
Creative Spaces and Ambience?
Sometimes, a particular business requires a certain kind of ambience. For example, if you are a leading edge design firm, you need to be in an office space that promotes that image or in a space that you can design so that it promotes that concept.
This is where basic ingredients of the space you need must be analyzed. For example, these can include the amount of natural light, number of corner offices with views, the type and color of carpeting (unless you are willing to replace), what the building's foyer and exterior looks like, how well the building is maintained, whether interior walls or other architectural elements need to be torn down or put in, etc. Naturally, these variables - or lack thereof - will influence your overall cost.
Can you Expand?
Ask about the possibility of expanding or of getting first rights at adjacent space as it comes available. You want to stay flexible for future possibilities.
Essential "External" Elements. Every business requires certain external elements in terms of location in order to succeed. For example, does your storefront business depend on foot traffic? Do you need to be located near public transportation? Do you need to be able to provide ample parking? What kind of parking do you need for yourself and clients?
Is your clientele the type who will only be comfortable in a certain area of town? Is an alarm system or upstairs location a must-have? What about zoning and land use restrictions? Do you need a building that is already wired for computers and the Internet?
Sometimes, you can acquire elements from the exiting tenant who may want to sell existing network wiring, an alarm, phone system, furniture, or more.
Help! A commercial real estate broker can assist you in the hunt for the ideal location and property. They also often can give you the benefit of local knowledge; i.e., the quality of certain landlords and properties.