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Office Space: Buying, Leasing, Negotiating

By Neetal Parekh on September 04, 2009 | Last updated on March 21, 2019

If your small business has moved on from existing on your computer desktop, can no longer be contained at your desk, and is even testing the limits of a home office, you may be ready to move the show to an actual office space. It is a big leap that can ultimately help your business grow, but can also involve higher overhead costs.  Below are considerations as you prepare to make the move.

  • The rent or buy question.

Considering the favorable renting and buying conditions with the current economy, deciding whether to rent or buy is not black or white.  Buying a location can allow more flexibility on how you use the space or if you need to build or tear any part of a structure down and can offer tax incentives to your small business.  Likewise, in many parts of the country it is a buyer's market for commercial real estate.  If your business can afford to invest in purchasing a property, consider buying one that will allow you to lease space to other small businesses.  Their lease payments will lower overhead costs, and could potentially cover the entire mortgage payment.

If there is not enough cash flow to merit purchasing a property, then look closely at your company's leasing potential.  The economy has created a strong commercial leasing market and you should be able to negotiate a competitive deal for your small business. 

  • Zoning considerations.

How you will use the space?  Will there be food preparation, do you need any specialized machinery, will you require any special water needs?  Consult local zoning ordinances.  Common categories of zoning include: residential, commercial, industrial, and mixed-neighborhoods.

Zoning can be complex, so it is a good idea to check with the local city planning council or business development office to find out about any restrictions that could limit your use of a particular property.

  • Negotiating a favorable lease.

Determine your budget and then look at how you can maximize the bang for your business buck.  If leasing a space, considering sharing the lease with another small business.  This could mean considerable cost savings and may not 'cost' much in terms of space or logistics.

Likewise, if your business offers professional services, you may just need an office location to meet clients.  Look into spaces that allow entrepreneurs to lease office space on an hourly or daily basis.  Many of these office buildings have receptionists, meeting rooms, and copiers, and other office supplies and features that will be useful. 

Remember that your lease payment is helping the owner of the building pay the overall mortgage.  So don't hesitate to get creative in suggesting a lease arrangement that works best for your company.

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