Working from home has been great, but your business has grown so much it’s time to take it out of the kitchen and into a real office. Whether or not you have the spare working capital for office space or you need to get a small business loan to move out, negotiating a lease is not too scary—if you know what to ask. Here are five tips:
1. Come prepared. Know the lease costs in the area you’re looking at before you talk to the agent, so you don’t get ripped off. Know what you need, not only in terms of space, but also what kind of utilities you need, such as high-speed Internet.
2. Is the price right? Ask what the cost is per square footage and if there are any Common Area Maintenance (CAM) costs. What all is included in the total costs? Is it just the basic finishing (white walls and concrete floor) or more? What about property taxes, site maintenance such as the parking lot, and landscaping? Don’t forget utilities, property insurance and trash collection. If the landlord doesn’t cover these costs you’ll need to add them to your monthly budget.
3. Traffic numbers. A good commercial real estate agent who’s familiar with the area should have car counts and demographics. Do you need foot traffic or is your business one where people will need to park and stay awhile? Are there any large anchor stores to draw more traffic in or is the anchor a competitor to your type of business? In most cases, a popular anchor store is a good thing to have in the vicinity, and you can benefit from the activity it creates.
4. Lease terms. Think about the future before you sign on the dotted line. Is this space big enough for the coming year, or do you think it could last a few years? If you don’t plan on expanding and won’t need more space, the longer your lease, the more bargaining power you have with the landlord. If your expansion includes hiring more staff, is there room to put all these new employees? Make sure your landlord can’t double or triple your rent once the lease is up. It would be disastrous if you were settled in and had to leave because of skyrocketing costs.
5. Finally, don’t be afraid to ask! Especially in this sluggish economy, the bargaining power lies with you. What do you want? Free rent for the first few months? Help with tenant improvements? Adjustments to rent during slow seasons? It never hurts to ask, and if the landlord doesn’t seem open to bargaining, there’s always another space somewhere else. Be sure to have an attorney look over the lease to confirm you’re getting what you asked for.
Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at firstname.lastname@example.org, follow her on Google+ and Twitter.com/Rieva and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.