Determine the Space Your Business Needs

Ten issues to consider before you look for commercial space to rent.

Whether you're a small start-up or an established business, begin your search for a business rental by carefully thinking through your needs. A clear understanding of what you do (and don't) want will save you time and money, so before you hit the pavement or engage a broker to help you find the right spot, go through the points below and analyze what's most important to you.

First, before you plunge headlong into the search for suitable commercial space, think carefully about whether you really need to find space now. It may make more sense to run your business from your home. If you're just starting out in a business that doesn't require significant space or ready access to the public, maybe you can keep expenses lower by working out of your house or apartment.

Or, if you're already renting space but looking to move, you might consider ways to improve your current lease situation and avoid the expense and inconvenience of relocating. Take another look at your lease -- does it have an option clause, enabling you to expand into available space?

1. Priorities. If you're convinced that now is the time to move, think carefully about what you need, would like, and won't abide. Take out a sheet of paper and list items in three columns: "Must Have," "Nice to Have," and "Won't Have." Your goal is to end up with a concise statement expressed in words ("downtown area") or numbers ("maximum $3,000 rent"). When you begin to consider available space, you can use this list to quickly and concisely evaluate its suitability.

2. Rent. The first issues to consider are the most obvious and, for many, the most important. Figure out the maximum rent your business can afford to pay per month. And if the landlord asks you to put down a security deposit before you move in, think about whether your reserves can handle a particularly big hit in the first month. Finally, consider how much money you can afford to spend to alter the space to fit your needs and tastes.

3. Location. The physical location of your business is likely to be important to you, your employees, your customers or clients, and your suppliers. The more people and groups you need to please, the smaller the number of possible rentals that will fit the bill. Consider the neighborhood, commuting time, and access to public transportation.

4. Length of the lease. It may be important for you to secure a space that will be yours for a long time to come -- or you might want the flexibility of a shorter lease. Do you need to find a place right away? Or do you have the luxury of shopping around until you see the perfect spot? You need to assign a value -- a priority -- to the length of the lease and when it's available.

5. Size and physical features. Almost every tenant is concerned about the size of the rental. You'll want enough space, but to keep the rent down, limit the size to what you really need. You'll want the space to be well laid-out, comfortable, and welcoming to employees, clients, and customers.

6. Parking. For many businesses, it's essential to have ample parking -- whether in a designated lot on the building site, on the street, or in a nearby parking garage. Parking may be a high priority for several reasons. If public transit is inadequate, people will need to drive to your business. If your business involves selling or servicing large items such as stereo equipment, customers will need nearby parking.

7. Building security. If crime is a known problem in the neighborhood and customers or employees are assaulted or robbed, you may be found partially responsible if you have not taken reasonable steps to prevent criminal incidents, or at least warn of them. Your landlord, too, may ultimately bear some responsibility, but the portion of a jury award or settlement figure that you end up paying is hardly the point. You never want to be in a position of worrying about customers' and employees' safety. So think carefully about the security of the neighborhood, and if you conclude that the risk is too high, look elsewhere.

8. Image and maintenance. The way a building looks -- and how it's maintained -- will be important to some and practically irrelevant to others. In general, the more your business serves the public, the more important is the building's appearance. If no one ever sees or visits your business, it may not matter much, except to you and your employees.

9. Expansion or purchase potential. If you plan on growing your business or would like to own your building in the future, you may want to rent space that has the potential for expansion or purchase. You'll save yourself the hassle and expense of another search and move to a new space, and you may be able to lock in favorable expansion or purchase terms now, in your lease. Look for a a lease with an option to renew or an option to buy.

10. Neighboring tenants. It may be important to be in a building with certain types of tenants -- for example, businesses that complement yours or provide a needed service. Lawyers, for example, may want to locate in a building where there are accountants or title insurance providers. Healthcare professionals may want to be near a hospital, pharmacy, or lab. Whatever your business, you may want to find a building that houses a health club, coffee shop, or a fast copy service that you, your employees, or your customers will find handy.

Want to Learn More?

Nolo's Negotiate the Best Lease for Your Business, by Janet Portman and Fred Steingold, contains in-depth information about determining what space is best for your business, evaluating vacancies, and negotiating the best price.

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