Maybe you’re searching for a storefront on Main Street. Or a snazzy
office space. Or a commercial shop in a light industrial district. Or
maybe you just need a perfect niche spot for a kiosk.
Whatever your needs, leasing a space for your business is one of the
most important decisions you’ll make for your startup enterprise. And
the decision-making process is littered with landmines.
To safely navigate finding the perfect location for your startup, follow
these three strategies:
- Find the right location
- Beware of property restrictions
- Investigate prices
Find The Right Location
The wrong location can doom your small business. Remember, this is a
commitment that will last a year or longer. And it’s going to cost your
startup a big chunk of change.
So before you strike out on your real estate shopping spree, make a
short list of your requirements.
For instance, you should carefully match your business location to your
customers. A hip, upscale art gallery might be a hit in an urban setting
full of young adults. But, the same shop might fall flat in a suburban
location that caters to families. Take your customers into consideration
when you evaluate a location.
Also consider your products and services. Typically, the more
specialized your product or service, the farther buyers will travel to
make a purchase. If your business sells specialty items, you can attract
customers from a wider area. However, if you’re selling frequently
purchased items (like bread and milk), it’s unlikely that buyers will
drive past other stores just to come to your business.
Here are other specific questions to answer:
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Do you need walk-in traffic?
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Do you want to be near (or far from)
competitors?
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What kind of parking do you need for
employees and customers?
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Do you need a delivery entrance that can
accommodate large vehicles?
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Do you need convenient freeway access?
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Does your business image require glitz
in a high-profile area or can you avoid the swankiest (and most
expensive) areas?
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Do you need a space that will
accommodate the growth of your business?
Beware Of Property Restrictions
You might spy the perfect the location, only to find that property
restrictions make it a no-go for your startup. But you won’t know about
those restrictions unless you do your homework.
First, check on the property’s zoning. Cities zone areas and buildings
by category: commercial, industrial, residential and mixed-use. Check
with the city’s zoning commission to see if your business meets the
restrictions.
In addition to zoning, cities frequently restrict property use in other
ways. Some cities dictate closing times for businesses and limit the
size of signs. Others require businesses to have a certain number of
parking spaces. Contact your city’s business development office for a
full list of restrictions.
Shopping centers, malls and other retail complexes can limit the types
of businesses they accept. For instance, they may stipulate that no more
than two automotive shops can operate in the same complex. To find out,
call the leasing agent for the property and ask about lease restrictions
before you get your heart set on a location.
Investigate Prices
A final assignment: Find out about the real estate market in the areas
that interest you.
Talk to real estate brokers, consult Web sites and check with the local
chamber of commerce to find out what’s happening with real estate.
In general, if an area shows more than a 7-percent vacancy rate, that
makes it a tenant’s market. It will give you the power to negotiate a
better lease agreement. On the other hand, if an area is at a 98-percent
occupancy rate, you might not have much wiggle room.
Also find out about general leasing rates. Before you decide on a single
property and enter lease negotiations, get an idea of the going rate.
Commercial rates are usually quoted by the square foot. For instance $12
per square foot for a 1,000-square-foot space would cost you $12,000 per
year.
That might sound like a bargain, unless you know that similar properties
in the area are leasing for $10 per square foot. The only way to be sure
that you’re getting a good deal is to know the going rates.
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