Welcome to our weekly Buyers Guide series where we share everything you need to know about specific business purchases, including the questions to expect and the questions to ask. Here’s how to choose the right business real estate broker or office space for your business.
Commercial real estate is a cornerstone for every business, whether it’s a 3 person startup or 500 person enterprise-level SaaS company. Regardless of company size, understanding the commitment and costs involved are absolutely critical.
WHY YOU NEED REAL ESTATE
Every company is going to need commercial real estate space at some point – unless you’re in the minority of businesses that operate virtually.
The first thing to consider when thinking about real estate space for your startup is your time commitment and budget. If you’re planning to grow quickly, you might be more apt to choose office sharing (or subletting) or leveraging a coworking space, as opposed to signing a traditional 2-3 year lease. Shorter-term options often come furnished and with amenities such as internet and telecom.
Ready to choose a long-term office space that you can grow into over time? Make sure you’re aware of the details involved with a longer term real estate commitment, including:
- Upfront costs – security deposit, attorney fees, furniture, telecom, insurance, amongst others
- Budget commitments – do you or will you have the funds required to pay for your commercial space for the next few years?
- Location – is the location conducive to existing and future employees, including proximity to public transportation and major roadways?
- Office culture – it’s important to consider the office layout/designs available with the real estate you’re considering.
WHY YOU NEED REAL ESTATE NOW
Depending on your location, it can be incredibly difficult and time-consuming to source and close on the right location for your business. Many experts recommend being as proactive as possible when it comes to commercial real estate, often starting your search 3 months or more in advance.
Lease rates, landlords, and other companies are constantly changing, so it’s best to understand your business’s needs and prepare ahead of time.
IMPORTANT REAL ESTATE CONSIDERATIONS
If you have a general idea of your business’s potential growth trajectory, choosing the right commercial real estate space can help you avoid lost time and money associated with relocating your entire company.
You’ll usually be signing your commercial lease with the aid of a real estate broker, that connects you with the landlord/owner, management company, or coworking space, and negotiates on their behalf.
Here are top considerations throughout the real estate process:
QUESTIONS TO ASK A REAL ESTATE BROKER:
- What size and type of business do you typically service? Can your services grow with my company?
- What class buildings do you work with? Buildings are usually classified into three types: A (newer, more expensive), B (older, less amenities, average costs), and C (usually older than twenty year old, in need of major repairs)
- Is there an opportunity to sublease if I can’t fill the space?
QUESTIONS THE REAL ESTATE BROKER WILL ASK YOU:
- How much space do you need?
- Do you want an open floor plan or individual office space?
- What locations are ideal?
- What locations are off limits?
- What are your growth plans for the next 6, 9, and 12 months?
- Do you need furniture & office design or do you plan to DIY?
- Do you have the funds needed to pay upfront costs?
- What is an ideal and stretch monthly rent for your business?
It’s important to read through your lease terms and conditions before signing anything. In many cases, you’ll want to have an attorney read through any long term commitment.
Is your real estate broker or future building manager available at all times? From a loss of electricity to re-negotiating your lease, you’ll want to understand when these parties can be contacted.
Ask for the ability to speak with references that have either used your broker in the past, or are current tenants of a commercial space you’re looking to occupy.
Want to join 10,000 people from companies like HubSpot, Drizly, and DraftKings that receive our newsletter once a week? Sign up below.