Leasing Commercial Office and Retail Space for the Budding Entrepreneur

By | April 4, 2014

There is a lot of opportunity in investing right now, especially since we’re at the beginning of an upturn in the economy. So, if you are setting up your new business, you will undoubtedly need to lease space, whether you’re opening a retail space or office.

It’s just so much more commercially viable if you can plough your capital into the business, not the purchase of the units. For start-up businesses, the cost of renting vs. purchasing office space offers tremendous advantages in saving precious start-up capital. However, you’ll need to look into leasing your space.

Property Managers

Professional property managers specialize in handling residential and commercial real estate which businesses can lease as office or retail space at affordable rates. Commercial properties are leased on specific terms and conditions that are stipulated in contracts provided by the property management firms. You will need to sign one if you wish to lease space:

Retail Space

Stores need to open up in attractive locations that can draw in customers. You’ll find commercial retail space is available for rent through property management companies. Prime retail locations are typically situated inside shopping malls, at busy shopping plazas, and even in popular high street venues. Commercial property managers also usually charge premium fees per square foot for the most desirable retail locations.

Office Space

Office spaces can command quite a premium, depending on its location in urban or non-urban environments. Additionally, you will need to look out for such additional aspects: public transport to the location, parking lots (esp. if you have lots of workers), restaurants and other infrastructure for your staff, location in respect of your suppliers, deliverers and your customers. Are you, for example, near an interstate or railway station?

The Lease…

Once you have completed the crucial task of identifying a business location, the next step is to negotiate a lease. Considering this is often one of the biggest expenses you will have, do your homework before you lock yourself into anything. For starters, do not assume a commercial lease is the same thing as a residential lease.

… and its conditions

General maintenance and care of the property will likely be your responsibility. You will not have the luxury of calling up the landlord to fix your air conditioning units. But commercial property managers may be responsible for all exterior maintenance of an office building. Snow removal and landscaping are done as needed by a management company. Similarly, the common areas such as the lobby or lounge will need to be maintained by the management (if the property is shared by others).

Also, it may be challenging to find a 1-year lease. If you cannot, then it becomes increasingly important to ensure you understand the lease in detail and are fully aware of all potential fees. The last thing you want to do is create a budget which later on is inaccurate due to surprise costs.

Along those lines, consider obtaining legal help. If this is your first time leasing commercial space, then save the learning curve for a less significant expense.

Financial Advantages

While a seasoned and established business owner may choose to consider purchasing real estate, that may not be an affordable option for someone just starting out. By leasing space from a company like Hi-Reit (which leases office and retail space in the United States of America) you are not tied to a mortgage.

Perhaps your monthly rent will even qualify as a tax deductible business expense. There is the additional benefit of not tying up your money in ownership, but rather investing it into the launching of your business.

The Exit

Regardless of the successes or struggles with your business, make sure you have an exit strategy. Without knowing what the future holds, you would be wise to insist upon defining a termination process. If you need to move or close up shop, you want to have minimal constraints to do so. Remember, your time to negotiate is before you sign the contract, not after.

Have you had problems starting up your company because you couldn’t find a location? I know we had terrible trouble trying to find a property that was zoned so we could get the business licenses needed.