If you are considering starting a business or relocating your existing company you are probably ready to get out and start searching commercial real estate spaces. The last thing you want to do is rush into finding a new space. You might get lucky and find an ideal space however more than likely you will end up in an unsuitable space or sign an undesirable lease term that you will be stuck with for the next 3-5 years. Before actually staring your commercial real estate space search it would be a good idea to sit down and ask yourself the following questions:
- What is the maximum monthly rent that I can afford? Don’t waste time looking at spaces that are over your budget no matter how great it would be. If you have not started your business yet it’s difficult to estimate your future cash flow. It’s ideal to underestimate than overestimate your projections. Retail businesses will typically spend about 10-15% of gross sales on rent.
- How much space do I need? Part of that depends on how many employees you will have. Estimate about 125 to 175 sf per person.
- Why am I moving? Maybe you have outgrown your space or your current building can’t accommodate your future needs. Maybe you want to be in a nicer building with more amenities.
- What benefits will I gain from moving? Shorter commute for my employees? Better sales? Lower cost? Closer to my clients? Nicer building? Fitness center?
- What do I like most about my existing office space? Take note of the things you really like about your existing location so you can duplicate those in the new space.
- What is my ideal office space layout? Do I want an open office or a lot of hard-walled offices?
- What date do I need to move by? The new building may take 3-6 months to be finished out so it’s important that you negotiate the lease in a way that keeps you from having to pay double rent. Also, you want to set the expectations for the company and your vendors.
- How long of a lease term am I comfortable signing? Most landlords will try to get you to sign at least a 3-5 year lease. If you are a startup you might prefer shorter terms leases, however just keep in mind your lease rate might be a bit higher than someone who does a 5 year lease. You also won’t be able to negotiate any tenant improvements. If you are renting medical space then you will probably want to sign a 5-10 year lease because of how much the tenant improvements will cost and so you can keep competitors from taking your space.