So you’re starting a business for the first time and need a storefront. You think you’ve found a good location, but the rent’s a little high, a lot of work needs to be done before the space is usable, and you’re worried about pouring your life savings into something that statistics say won’t pan out. What do you do when you’re confronted with an overzealous agent, pushy even, of a space that might or might not be perfect for your business?
Here are a few things to consider:
Want concessions? In this economy, go for it! But be realistic. If you’d like a lower rent, a shorter lease term, or a lower deposit, then ask. But consider that the owner is in business, just like you plan to be. The owner will not rent you your dream space if it costs too much to do it.
Timing is Everything: Whether you lease or buy, put your business in the right place the first time. Most commercial leases will last two or more years, and depending on the business, may last ten years. Having a lease for that long may or may not be good for your needs. If you are moving into new construction and you foresee business and industry growing around your own business, it may make sense to lock in your rent for ten years. On the other hand, if your personality craves a change of scenery and the thought of being in one place for ten years makes your palms sweat, then consider asking for a shorter lease or at least making sure your lease lets you sublease or assign without penalty.
Location, location, location! Putting a convenience store where it’s inconvenient wouldn’t be a smart move. Renting a storefront for a business that will be open for only a few hours a day may not be a smart move, except in certain special circumstances. Opening a delivery restaurant in a crime-ridden neighborhood is probably not the best idea, either. The owner must consider the safety of herself and her employees. She must also consider the increased costs of insurance, theft, and property damage.
Where to locate, then? Consider the neighborhood, car and foot traffic, and surrounding businesses. Is traffic dependent on the season or school being in session? Who wants your goods or services? Locating a tavern in the middle of a church-filled neighborhood may not be a good idea, even if zoning laws don’t prohibit it. Does your ideal location have a place for parking? Is it inviting? Is ground maintenance part of the property owner’s responsibilities or yours? Make sure ground care is specified in the lease.
What type of business do you have? Is it a “destination” or is it a place between your customer’s home (school, work) and her destination? Examples of a destination may include a fancy restaurant, a theme park, an industrial park or offices, work, or school. Will your customers go out of their way to go to your business? If that isn’t likely, then make sure you locate your business appropriately.
How much will it cost to open your storefront? If your business is a restaurant, for example, you will spend much money fitting the building to your needs. Hoods and exhaust, sinks, and cooking equipment must be put in, as well as additional air conditioning to compensate for the extra heat that will be generated. Find an expert to tell you what you need. Also, check zoning regulations and get information from the local health department to see if there are any idiosyncratic rules that apply.
Commercial property comes AS IS. The landlord will not usually modify the space. In a commercial setting, it is very likely that the landlord will rent you a shell, and your dream space will require your time and money to suit it to your business. You may even have to put in walls within the space. That said, try to negotiate for heating systems and air conditioning if they are not already installed in your dream space.
Who pays the heat? If your dream space is part of a larger commercial building, determine how the utilities will be paid and who will be responsible for maintenance.
Limit your competition. For example, if your dream space for your fried chicken restaurant is in a strip mall, make sure there is a provision in your lease that prevents other fried chicken joints from opening up in the same strip mall. It goes without saying that opening up a fast food burger joint between two fast food places and across the street from two others is probably not the smartest move a business owner can make.
What is a fixture, anyway? A fixture, as defined by law of the jurisdiction, will remain in the dream space after you leave unless you make a special provision in your lease that allows you to take it with you.
In the mall? Be aware that signing a lease for a space in a mall may require that the lessee’s business remain open during the mall’s operational hours. A fine might be imposed for closing shop a half-hour early, for example.
Posted by debmcnichol 
