Preparing to open your first store is an exciting and huge accomplishment. But as you embark on finding the right space for your business, there can be unknown pitfalls along the way.
“Consumers who deal directly with a prospective landlord or seller often don't have the leverage to negotiate best terms,” says Mitch Gauzas, Realtor®-Salesperson at Keller Williams Integrity Realty. “An experienced commercial Realtor® acts as an intermediary in negotiations, keeping decision-makers on both sides at arm’s length. This creates space for finding solutions and an atmosphere of competition to arrive at better outcomes.”
Here are seven common mistakes first-time tenants make when looking for that perfect space – and how to avoid them.
1. Budget consideration
You can easily feel an emotional pull towards a commercial space because of how it looks on the outside. However, consideration of your budget should be first and foremost in your mind.
“Committing to a high rental rate to get that beautiful space can make or break you,” says Leena Ray, Realtor®-Salesperson at Coldwell Banker First Ottawa Realty. “Consumers will come to your space because you have a great product or service – not because your building has a beautiful facade.”
2. Treating a landlord as the opposition rather than an ally
You want to have a good working relationship with your landlord. “Having a professional working with you will help you to navigate the space requirements, negotiate favourable terms and create a lease that provides a framework that benefits both the landlord and the tenant,” says Mike Lewicki, Realtor®-Broker at Keller Williams Integrity Realty. “That way you can focus on what you need.”
3. Assuming that doing it alone will save you money and time
Leasing commercial property can be very tricky. Enlisting the services of a team of professionals to aid in renewal or search for new space can save you additional costs down the road.
“Commercial members of the Ottawa Real Estate Board understand the market and will ensure a market deal involves everything from rental rate, leasehold improvement allowances, fixturing periods, free rent period, early termination rights and options to renew,” says Geoff Godding, Realtor®-Salesperson at Decathlon Commercial Realty Corporation. “This could save you time and money.”
4. Hiring the first sales representative you meet
When you’re hiring new employees, you’ll typically interview several people and choose the person who is the best fit for the job and for your business. The same holds true for real estate professionals.
“Business owners should interview at least two or three commercial salespeople before selecting a representative,” says Godding. “Make sure your representative works the specific real estate market segment in which you are seeking space, and has access to leading edge marketing tools such as the MLS® System. Ask for references and a list of similar deals they’ve completed.”
5. Not understanding commercial zoning
Ottawa’s zoning bylaw controls how commercial space may be used. It’s complicated, and ever-changing. The worst thing you could do is to sign a lease only to find out that the zoning doesn’t allow for your intended use. “We are experienced in verifying zoning and other restrictions to ensure that the use is permitted,” says Chris Tremblay, Realtor®-Salesperson from Royal LePage Team Realty.
6. Overlooking building specs
Another pitfall involves failing to verify building specifications such as power capacity, ventilation and fire rating. “An experienced Realtor® can ensure that all aspects are considered to ensure that the chosen space meets, or can meet, all criteria and requirements necessary,” says Tremblay. “This saves the client time and unnecessary costs.”
7. Not including a lawyer in your professional team
Whether leasing office, retail or warehouse space, tenants should always have their leases reviewed by a lawyer. “Leases are complicated documents and need a trained eye to ensure the obligations of both the landlord and tenant are understood,” says Godding. “Without a good team of experts, business owners could potentially get themselves into hot water.”