What to Consider When Buying a Commercial Space
Thinking of buying a commercial space for your small business? Before you sign the mortgage, here are some tips for what to consider.
So it looks like you’re ready to grow your business and take on a new commercial space. Although this is an exciting time of expansion, you might be feeling overwhelmed or unsure of how to choose the perfect space for your business. Fear not, we’ve got you covered with this 10 point checklist on what to consider when buying a commercial space.
1. Form a Band of Experts
When you own your own space, you’re going to need to depend on others for their business expertise. Key professionals to team up with include an accountant, brokers, and a lawyer.
2. Is the Location Hot or Not
Do your research before staking your claim in a particular area. Neighborhoods shift, and hopping places can turn into ghost towns, and vice versa. Therefore, keep in mind that investing in a newly booming location doesn’t guarantee the area won’t become a bust.
3. Check How Long it Has Been Listed
Although this isn’t always the case, it’s good to get an idea about how long a property has been on the market. If it’s been a while, it might be time for another property valuation and/or appraisal.
4. Don’t Skip the Evaluations
It might appear that you’re getting a steal, but it’s important to have your property properly evaluated. There might be something lurking just behind the surface, like asbestos, or an underlying mold problem. Be sure to get your property checked out before closing the deal.
5. Know the Zoning Restrictions
So you think you’ve found the perfect spot to buy, but do you know if you can even legally set up shop there? In some cases, zoning permits will not cover your planned use (i.e. large retail shops). Zoning can also restrict building plans if your site is located in a local historic district or near a school.
6. Be Mindful of the Details
You might not buy Energy Star appliances for your home, but if the property is equipped with environmentally friendly features, you will find yourself saving in the long run. There could be tax breaks for these, too, so pay special attention to properties with these features.
7. Validate the Taxes are Do-Able
The taxes on commercial properties can be steep! After local and state taxes, make sure you also are accounting for permit, license, and other fees.
8. Don’t Bite Off More than You Can Chew
So a pipe bursts, or the snowfall is so heavy that you wake up on Saturday morning only to go plow out your location. Make a budget and ensure you’re not committing to too much by owning your own property. There are some perks to being a renter.
9. Remember, You’re Making a Long-Term Choice
If you buy, you’re tying up a lot of your capital in your space. Make sure you’re comfortable enough to stay afloat, even if you’re having a few particularly slow months. From the buyer perspective, a deal might happen quickly, but selling can take a long time.
10. Negotiate the Right Terms for You
Do your research to try to drive down sale prices. Check the market sales of properties around the one you’re looking at, and make sure you’re getting bang for your buck. For instance, you can measure the price per square feet by dividing price by the usable square feet.
Following this checklist will not only make the process of shopping for commercial space easier, but it will also help make it as short as possible.