Things to consider before leasing space

 

Editor’s note: Michelle Stockman is an independent consultant with her company, Fort Smith-based Msaada Group. Stockman earned a bachelor’s degree from Loyola University-Chicago in communications and fine arts, and earned a master’s in entrepreneurship from Western Carolina University. Her thoughts on business success appear each week on The City Wire.

Given all the decisions to make, steps to take and details to determine, it is ironic to realize that determining the business’s location is often the most difficult. While some areas have plenty of mixed zone properties available for rent or purchase, smaller communities lack a variety of space or access to finding the right business location.

Entrepreneurs are resourceful, so they will find a space for the business. However, most small business owners are not equipped to negotiate with landlords effectively. In working with small business owners, I have heard countless stories of bad landlords, office buildings that are not secure, flooding problems, rent costs above market value, and so forth.

Negotiating for commercial space can be intimidating, especially when the availability of commercial property is limited. However, the business owner needs to take control of the negotiation, even to the point of being willing to walk away from the property and the negotiations. Like negotiating the price of a house before purchasing, ask for what you want with the commercial space. The worst that could happen is the other side will say no.

Katie Morell on the OPEN Forum by American Express OPEN notes a few things to remember when negotiating a property lease:
• Ask away: Asking for a lot allows landlords the flexibility to say yes to some things and no to other things, she says.

• Enter into negotiations prepared to ask for many, many concessions. Go for the “No.”

• Re-negotiate existing leases: Leases can be negotiated at any time, so if you’re in a pinch, consider talking to your landlord. “Ask your landlord if you can reopen discussions; it is easier for a landlord to get some money than to foreclose and try to secure another tenant — they have to deal with opportunity costs.”

• Do your research: Preparation and planning are of utmost importance in a negotiation, doing research on the landlord, the building, and who is currently renting on the premise.

• Deal with the decision maker.

• Consider total costs: utilities, garbage disposal, maintenance, up fitting, etc.

• Take your time: Don’t sign the dotted line until you are ready and have a chance to review the full documentation.

• Remember that any changes or improvements you make on a commercial property, unless you own that property, becomes an improvement for the land owner. This is an area to surely negotiate with the landlord.

• Also, make sure you obtain all the zoning and regulatory information you may need in order to decide if the location in question is a good fit for the business or not. The more you investigate on the front end, the more you will mitigate your risks before being legally locked in to the location.

Don’t know where to start in locating a business location? The Internet is a great place to start. There are Internet tools to help start the search for commercial property. In this region, the Fort Smith GIS department and the chamber offer a commercial property search tool. There are also commercial property real estate agents available to help the search as well.

Regardless of your route, you can start by putting your property wish list together that notes what you must have, what you must not have and what would make your life a dream in a business location. Once you are ready to obtain the location, happy negotiating and don’t quiver for one second.

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Stockman can be reached at [email protected]