Choosing Wisely: Your Guide to Renting the Right Space for Your Business
January 29, 2024
In the dynamic world of commercial leasing, renting the right space is a critical decision for every business. Our second chapter in the "Lessons in Leasing" series delves into the essentials of choosing an ideal commercial property, focusing on space, location, and property type.
Determining the Amount of Space You Need
Deciding on the right size for your commercial space is pivotal. Different types of businesses and different employment structures can factor heavily on this decision. There are several tools and rules of thumb to help your business choose wisely:
Online Space Calculators:
There a a lot of free tools out there and they are a great starting point. They consider your business type, employee count, and special requirements to suggest an appropriate square footage calculation.
Rule of Thumb Calculations:
- Office Space: Traditionally, 150-250 square feet per employee is recommended. However, modern open-plan layouts might require less, while executive offices or specialized spaces might need more.
- Retail Space: Think about customer experience - not just sales floor but dressing rooms, storage, and checkout areas. Aim for a spacious, inviting environment that reflects your product and your brand.
- Industrial Space: Consider both operational (manufacturing areas, storage) and administrative spaces. Custom requirements like ceiling height or loading facilities are also key.
Architects and space planners can offer bespoke advice, tailoring space to your unique operational flow and future growth plans.
Key Factors in Choosing a Commercial Space
Accessibility: Easy access for clients and staff, ample parking, and public transport options are vital.
Visibility: For retail, high foot traffic and visibility can drive sales. For offices, a prestigious address might enhance brand image. If you have a coffee shop you want to be on the right side of the street for morning traffic.
Neighborhood or District: The local business environment, competition, and cultural vibe can impact your business.
Co-Tenants: Know your neighbors and make sure their business makes sense next to yours.
Zoning laws dictate the type of activities permissible in a space. Confirm that your business activities align with these regulations.
Understanding the local population - their age, income levels, and lifestyle - is crucial, especially for retail and service-oriented businesses.
Some leases or locations limit types of businesses or activities. It's vital to ensure that your intended use is not restricted.
Consider all costs: rent, utilities, taxes, maintenance, and any additional fees. Budget for both current and anticipated future costs. It is important to know whose obligation it is to pay each expense. For example, a full-service building may seem more expensive when you compare only the rent price to a modified gross rent price; however, when you add in the cost of utilities and maintenance to the MG lease you may end up paying more. Ask questions, your broker and landlord should be able to guide you.
Different Types of Commercial Real Estate
From traditional corporate offices to creative co-working spaces, the right office environment can foster productivity and reflect your company culture. However, the wrong office environment can affect employee and client morale and can influence how potential clients perceive your business.
Location is key. Malls, strip centers, or standalone buildings each offer unique advantages and target different customer bases. You must know your ideal customer and put your business in front of them.
Ideal for manufacturing, logistics, or large-scale workshops. Features like dock loading, warehouse space, proximity to highways and ceiling height are important considerations.
These spaces combine retail, office, and sometimes residential areas, offering a unique blend of convenience and community engagement.
The journey to finding the perfect commercial space is multifaceted. By understanding your space needs, considering the key factors of location, zoning, demographics, exclusions, and price, and choosing the right type of property, you set a strong foundation for your business’s success. Make sure you have a broker to help you vet your choices, as we talked about in the last lesson, a tenant rep broker is traditionally paid for by the landlord, take advantage of their expertise to get the best rental price and terms possible for your business lease.
In our next "Lessons in Leasing" post, we'll navigate the complexities of commercial lease agreements, an essential step in your leasing journey.