A Checklist for Renting Commercial Space
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
This article was updated on 8/14/2023.
In the world of leasing commercial real estate, it pays to be prepared. Taking the time to conduct research, do your due diligence, examine market trends, prepare for unexpected expenses, and even locate a reliable commercial real estate broker will help you secure the best possible commercial space for rent.
It's a good idea to follow or create your own checklist when looking for commercial space for rent, so we've taken the time to compile one for you here. Follow the considerations below and your business will thank you in the long run.
#1 – Budget for Expected (And Unexpected) Expenses
You should realistically budget your expenses when looking for commercial property for lease and plan to expect the unexpected. Smart commercial real estate tenants have a short-term and long-term grasp on their finances before they sign anything.
The commercial property expenses you'll want to budget for will include:
- Rent;
- Utilities;
- Real estate taxes;
- Parking;
- Insurance;
- Security deposit;
- Common area maintenance;
- And more.
You should also create a renovation budget. For instance, if you're looking to lease commercial property for a restaurant, you may want to fix up the place and ensure that proper COVID-19 mitigation measures can be implemented before accepting customers.
#2 – Research Locations
Depending on the kind of business that you own and operate, the location of the commercial space for rent that you choose may or may not matter. If you plan on having employees in the office, you may want to ensure proximity to restaurants and other popular attractions; if you're looking to open an art gallery, you may want to rent in a busy metro location that warrants consistent foot traffic.
If your business is a sole proprietorship and you don't really plan on having employees or clients in your office, you may have the luxury of renting in a location that meets as many of your personal work preferences as possible.
#3 – Decide on Lease Length
The length of your lease will affect which commercial space for rent that you choose. For example, if you're in a rush to find a spot, you won't have the time to shop around and find the commercial property for lease of your dreams. In this case, you may want to settle on a shorter lease (even if it's month to month) so you can bail on good terms if you have to.
But if you're not in a hurry, you can afford to spend this time wisely. Say you're looking for retail space for rent in Austin, Texas and you're not in a hurry to find anything. Alongside proper expense planning and location research, you've decided you want to take on a long-term lease so it's easier to build a faithful base of customers in a shorter period of time. New customers who can easily remember where you are turn into repeat customers.
#4 – Figure Out How Much Space You'll Need
The next thing to consider is just how much physical space you'll need to properly operate your business. Landlords will measure the square footage of a commercial space for rent in different ways. This means there could be discrepancies between the listed square footage and how much you can actually use. If this happens, you'll be paying rent for space you can't even utilize.
If you're moving an existing business to a different spot, you'll have a better idea of how much space you'll need than if you were renting a commercial property for the first time. You can hire the assistance of space management planners who can reduce your margin of error and help you properly map out the dimensions of your physical space of operation and best leverage its interior usage.
#5 – Don't Forget About Your Neighbors
Depending on what your business is, you may want to find a multi-tenant commercial space for rent that houses tenants beneficial to your business; in other words, if you're looking for an office space to rent for a digital marketing company, you could benefit from renting in a building that's home to other business owners who you could turn into potential clients.
...Or the Competition.
At the same time, you don't want to forget about the competition. Maybe consider renting away from other businesses like yours and looking for blue ocean markets. Also, keep in mind renting near businesses that may deter your ideal base of customers. For example, don't pick a commercial property for lease for a business that serves children that's near popular bars and clubs.
#6 – Plan to Expand
Finally, deciding on a commercial space for rent that has the potential for physical expansion may be a good idea. If your business booms and you find yourself in need of such expansion, you'll save more money in the long run by adding onto an existing commercial property you're already leasing or leveraging an expansion option than you will if you have to search for and open another location.
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