Four Tips for Renting Small Business Space
There’s no one-size-fits-all advice on getting commercial property for a business because the real estate needs of different businesses vary per time. You may need real estate for an office space, a storefront, a warehouse, or even a place to display your ad banners. More so, the dynamics of leasing a commercial property has some unique peculiarities from the dynamics of leasing a residential property. This article provides you with four tips that could make it less stressful for you to rent a small business space.
You can always get a smaller space
When getting a space for your business, don’t be pressured or rushed into leasing a bigger space than you actually need. Irrespective of how your rent/lease is being calculated, you are paying for every inch on square feet on the property. Hence, it doesn’t make financial sense to pay for space you don’t need/use. Some landlords might go the motivational route of telling you that your business will grow into the extra space, but you need to be sure that you are making a logical decision to rent the space you need.
If you find a large space in the perfect location, you should consider asking the landlord if the space can be divided into a number of smaller spaces so that your rent can be reduced.
Lease durations are not set in stone
Different businesses need different kinds of leases but landlords tend to have some standard lease packages they’ll prefer to sell. Hence, you may be looking for a one-year lease only to learn that the landlord wants a 5-year lease.
Sometimes, the demand for a property is very high and the property owner is in a strong position to insist on a specific lease duration. However, there’s no harm in asking for a lease duration that fits your needs. Startups typically need shorter leases and businesses with a long-term focus should consider locking-in cheap rates in a long-term lease.
Your security deposit could be a deal breaker
If your businesses is already in a space, you might not need to bother about security deposits; however, the matter of security deposits will most likely come up if you are taking up new space to start or expand your business. Owners of commercial properties are usually worried about the survival of new businesses and they’ll be worried that you’ll want to close shop a couple of months later.
The security deposit is important to most landlords and you can expect to pay up to 10% of your total lease as the deposit. If money is likely to be a problem, you can look start searching for sources of business funding so that setting money aside for a security deposit doesn’t hurt your business cash flow.
Be sure you can trust your landlord
The property owner is worried about credit risk and that’s why you needed to pay the security deposit (see above). However, you also need to be sure that your landlord is not in a bad place financially. You don’t want to move in today and start looking for a new place three months later because your landlord went bankrupt or the property is in foreclosure. You should have an idea of the creditworthiness of the property owner and know if they are in any kind of financial trouble.