My vinyl logo was being applied to the front window while the property manager gave me a run-down of the building. After a short walk-through and some handshakes, I was given the keys to my very own workspace.
Although I had worked out of my garage for two years, this day felt like a new beginning. My business had officially found a home. From that modest 1,000 sqft workshop in South Lakeland, I was able to grow my business to new heights.
Finding a home for your new business is a big step and one that can make or break your development. Here are some tips from our Director of Commercial Sales, David Quinones, to help you navigate that journey as a new business owner.
Finding a home for your new business: Lease vs. Own
When it comes to finding a commercial property for your business, there are two options: lease or own.
A commercial lease is a rental for your business and can be used for several property types. A commercial lease will have certain limitations but give you more flexibility to change locations once your term ends.
Owning will give you complete control of your business footprint for as long as you own the property. As an owner, you will have the economic benefits of building equity and the assurance of fixed expenses.
Both options have pros and cons, but there is a clear winner when it comes to new businesses. Leasing will give your new business the flexibility to grow. In my own experience, it took me three different locations before I could find the footprint that fit my businesses’ needs.
A lease will allow you to relocate, grow or downsize as your business develops. This is true for businesses of all sizes. Even large corporations prefer the flexibility of a lease to adapt and change as their business does quickly.
Learn the lingo before you dive into finding a commercial property to lease. There will be several new terms that you may not be familiar with. Here is a glossary to get you up to speed:
- LOI – Letter of Intent: This is a form used to negotiate the terms of a lease. It is nonbinding and allows you to communicate your needs with the owner.
- Term: This is the length of time you will lease the space. For commercial leases, this is often 1-10 years.
- Base Rent: This is often calculated per square foot of rentable space but does not include additional taxes or fees.
- Triple Net: Many commercial leases pass building expenses on to the tenants. A triple net lease would include maintenance, taxes, and insurance.
- TI Allowance: A landlord may offer a tenant improvement allowance, a credit for the new tenant to improve the space to their needs.
- Exclusive Use: Negotiating an exclusive usage for your business can protect you from having a competitor move into the same building.
With some basic terms under your belt, it is time to find your business a home. There are several ways to find a property to lease.
The easiest is using an online commercial database. LoopNet is the largest commercial website in the country and will have the best collection of properties available.
You can set up automatic searches based on your criteria and even directly contact listing brokers from the website. Membership is free and is a must for anyone looking for commercial space.
Unfortunately, not every landlord is at the technological forefront in the commercial world. Many forgo online databases and prefer the old-fashioned- sign-out front approach.
A drive through your preferred market may yield several spaces that you can call and add to your list.
Now that you have found some potential locations and are ready to move forward, it’s time to figure out if the space is a good fit for your business.
Signing a commercial lease is a big commitment. You will want to do as much work to vet your new locations properly.
Zoning and usage restrictions are usually the first step. A call to the city or county will give you an idea of any permitting or licensing needed for you to operate. Other areas you should confirm are parking requirements, fire codes, environmental impacts, and safety regulations.
Every business has different rules and requirements. Confirm these with the city or county before you sign a lease. You should also walk the space with a commercial contractor before signing.
Building costs are rising daily, and if your space needs modifications, you will want to have an estimate in hand before going under contract.
As mentioned in the glossary, a TI allowance can be negotiated into your lease to give you credit for some of these needed improvements.
Someone on Your Side
As a new business owner, you have enough on your plate already. Having a commercial broker on your side is a great resource to help you find, negotiate, and lease a commercial property.
There are many hurdles to signing a commercial lease and having a broker who is looking out for your best interest can be invaluable.
Commercial brokers have a pulse on the current market and can find properties that fit your needs. Brokers will often have access to what is referred to as pocket listings. These are properties that are not being marketed or that will be coming available soon.
The current commercial market is very tight right now, and as a business owner, you will want every advantage you can take. Utilizing the expertise and experience of a local commercial broker can save you time and money and ensure your new location is the perfect home for your business.
ABOUT THE BLOG:
You can find this blog featured in EMERGE Lakeland. EMERGE Lakeland is a networking organization of dedicated, talented young professionals ranging in age from 21-42 in Lakeland, Florida. This member-driven organization is a partnership of the Lakeland Area Chamber of Commerce and United Way of Central Florida.