The single most important decision you can make in your business is leasing commercial property space. It is also the single greatest cost when running an enterprise. The right lease can give your business stability and customer traffic for years. The wrong one can run you out of business.
So how do we make sure you don’t make the wrong choice when it comes to leasing retail space for your business?
Here are our 6 steps to finding and leasing commercial retail property space:
- Work Out Your Budget.
- Determine the Type of Lease You’ll Need.
- Decide How Much Space You Need.
- Find Several Suitable Retail Space Options.
- Evaluate Each Potential Location.
- Negotiate Your Lease.
- Save Time and Talk to a Commercial Lease Locator Today – It Won’t Cost You a Dime
Let’s look at these in more detail…
Step One: How much can you spend when leasing retail space?
When checking out locations it’s easy to get caught up in the excitement of leasing a great retail space. Which is why it’s important to work out your budget ahead of time. This way you don’t go making emotion-based decisions because you “really liked that location.”
Depending on what industry you are in, leasing costs can range from 3% to 10% of your gross monthly revenue. Your leasing costs should not be above 10% of your monthly gross revenue. If you spend more than 10%, you run the risk of tying up precious capital, leaving little money to develop and grow your business in the future.
Step Two: What Kind of Commercial Property Lease Do you Want and Need?
There are 4 different types of leases you could be signing. The main difference between them is what costs the landlord pays and which costs you are responsible for.
The Four Most Common Commercial Property Leases
- Single Net Lease.
In this agreement, the only responsibility the tenant has is for paying property tax and utilities. The landlord takes care of the rest. E.g. maintenance, insurance, etc.
- Double Net Lease.
In this type of contract, the landlord only covers the maintenance. The tenant has to pay for utilities, property taxes, and insurance costs.
- Triple Net Lease.
Here, the tenant shoulders the majority of the costs. The landlord is only responsible for structural repairs. This is the most common type of lease.
- Modified Net Lease.
In this type of arrangement, the tenant and landlord split the expenses between them.
Step Three: How much room do you need in your commercial property space?
Every business has different space requirements. Avoid paying for space you will never use. But don’t restrict yourself by not having enough space for your business to grow into.
You’ll also need to take into account any regulatory requirements for your business. For example, a restaurant has a legal requirement to supply bathroom facilities to patrons. If the location you are looking at doesn’t have a bathroom, you may find yourself paying extra to install one.
Step Four: Find Several Suitable Retail Space Options
Try and find several properties that fit your criteria and compare them. Make sure you visit each location and don’t rent a space blind. When you have a selection of suitable locations you can compare each location against the others. Having many options can give you more leverage when it comes to negotiating a price with a landlord.
Here are a few ways to find properties that meet your business needs:
1. Online Brokerage and Listing Sites
Sites like Craigslist often have commercial spaces listed, often dealing directly with the landlord. While this can be a good thing if you’re a shrewd negotiator, often the landlord will have the advantage. You will also need to be extra careful to make sure the lease agreement is legal and enforceable.
2. Business Real Estate Lease Brokers
Business Lease Brokers can be some of the best ways to find retail spaces for your business. However, most brokers have limited inventory, only showing properties they get a commission on. In most cases they work for the landlord so rarely have your best interests in mind.
3. Local Lease Locators
This is by far the best option, local lease locators have a larger pool to draw from. They list properties from many sources and from multiple brokers, giving you a one-stop-shop for all your commercial property needs. Best of all the service won’t cost you a dime — it’s completely free if you are looking to rent a property.
Step Five: Assess Your Commercial Lease Location
Now it’s time to dive deep and assess the options you have selected. You should take into account several things when weighing up the suitability of your locations.
Ask yourself these five questions:
1. Where are your customers? It might be cheaper to rent in a warehouse district, but if your customers all shop downtown then it’s not going to matter how cheap your rent is.
2. Is the site in a Safe Location? When customers come to your place of business, they want to know they will be safe there. Make sure you research the area thoroughly, so safety isn’t a factor when your customers want to visit your store.
3. Is the space located near other complementary Businesses? Look for ways your business complements another. Cafes and bookstores work well together, as do restaurants and ice cream parlors. You can even ally with your neighbors and cross-promote your businesses and help each other gain more customers.
4. Is the space located near Your Competitors? Ok so this one sounds weird, but it makes a lot of sense. If you’re located near a competitor and they don’t stock an item a customer wants, it’s a lot more convenient to cross the road to your business than jump in their car and drive another 20 minutes. If you are a new business, this can be a great way to steal a few customers from another established business.
5. Is the site easy to access for the public, either via Public Transport or Major Highways? Make it as easy as possible for your customers to get to you. Don’t locate yourself in a weird spot where it takes a 15 minute round trip to get to your location.
Step Six: Negotiate the Property Lease for your commercial space
Now it’s the hard part, time to negotiate your lease. This can be tricky if it’s your first time and you don’t have much experience in signing a commercial rental agreement.
This is why it’s important to work with an expert. Commercial Lease Locators makes sure you don’t miss vital details and end up out of pocket if something goes wrong. The best part is, using our services is completely FREE.
Save Time and Talk to a Commercial Lease Locator Today – It Won’t Cost You a Dime
Get in touch today with Commercial Lease Locators. We’ll discuss your needs and help you find the ideal property for your business and negotiate on your behalf. All you need to do is drop into the office, send a message online, or call 512-920-6270.