We asked Rebecca Lapierre of Town Square Realty Group what some of the things a business needs to consider when looking for space. Here is what she had to say:
When looking for a space for your business there are many key factors that you will need to consider, below:
First, find and contact a local realtor that knows commercial real estate and knows the area well. Whether you are leasing or buying a real estate broker will be able to help you determine which is best for you, and will help you find the best location.
Once you have your location you will now want to determine if you want to lease or buy a building for your business.
Leasing: When leasing there are three common types of leases that you may encounter:
Triple Net- Where the tenant agrees to pay their portion of real estate taxes, insurance, and maintenance (the three nets in the property). In addition to any normal fees under the rental agreement such as rent and utilities. Most commonly found with multi-tenant, industrial, and retail properties.
Gross Lease- Landlord pays for fees such as heat, electricity, water, etc. Tenant will just pay for rent.
Net Lease- Landlord will pay for some fees such as heat, but the tenant may be responsible for rent and electricity.
Most rental spaces are going to require a certain amount of build out (renovations) to suit your business. You will want to know who is responsible for this build-out, you or the landlord.
Buying: When buying a building you will want to consider financing. Most commercial loans are going to require 25%-30% as a down payment and a business plan. There are local organizations or the SBA that can help assist you in preparing one. When you purchase a building you will also want to take into consideration the expenses you will incur such as loan, taxes, insurance, maintenance, utilities, etc. Your realtor will be able to help you through the purchasing process and should be able to help you identify a commercial loan officer to help you through the lending process.
Location, location, location… The location of your business is important to its success or failure. When looking for that location the following factors should be considered:
Traffic count: This is the 24-hour average daily count that cars travel along a specific road throughout the day. Traffic flow is also part of the traffic count (traffic lights, stop signs, speed, and ease of getting in and out of the location). Another thing to consider is the foot traffic that takes place. All of this depends on what type of business you are looking to start-up, office space has different demands than a restaurant or retail business. Traffic counts can usually be located on your state website.
Parking: You will need to consider how much parking will be needed for your type of business. A restaurant will want more parking spaces for their patrons and employees versus an office space where parking may be needed more for employees and fewer spots for patrons.
Demographics: You will want to consider the different types of demographics in specific areas that will fit your type of business. Examples would be population, age, income, etc. These criteria will be key in the location of your business.
Once you have identified a building that will fit your needs you will now need to consider the structure of the building. There are many factors that you will have to look at with the building such as the condition, zoning, and does it meet municipal codes for the type of business.
Condition: The condition of the building is an important factor. How much money will you have to spend to make the space the way you’d like it? Does it need remediation (removal or lead paint, asbestos, or other structural necessities)? How much maintenance will be involved in the daily operation of the business? These are all expenses that can add up fast.
Zoning: You will want to check with your local municipality on the allowable uses for the building and where it is located.
Code Enforcement: Every municipality has their own codes. Code enforcement officers will want to check your space out to make sure it meets code. They may require certain work to be done to the building or special permitting. Before being able to open your doors you will have to get an occupancy permit from the code enforcement office. Depending on the municipality this step can take time.
Finding the right location for your business is a time-consuming process. You should always do your due diligence before entering into any type of agreement whether that is a lease or a contract to purchase.
Note: We are very lucky to know of several great real estate professionals and was so happy when Rebecca Lapierre of Town Square Realty Group agreed to write a guest post! She is dedicated, experienced and really knows her stuff. If you are looking in the Sanford – Springvale or surrounding areas, we highly recommend her… Not only does she know real estate, she is also very active in the Chamber of commerce and understands the needs of business owners.