Leasing out commercial property to small businesses

have to be right for them to thrive.
Leasing out a commercial property can sometimes be a challenge to a small business owner who is new in the market.
It takes a lot of hard work for your business to grow from your car boot to the point where you have to find a commercial property to lease.
While your commercial real estate agent will be most competent to guide you through the process, it is invaluable to start with a few insider tips on what to look for when you begin your search for your perfect commercial property,
Most small businesses are in the retail sector and you cannot ignore the old adage – location, location, location.
If the retail business is such that it would benefit from a savvy choice of location then it is imperative that time and energy is expended into that part of your search.
Shopping malls or centres are the ideal places for such because one gets to gain from the goodwill created by others.
Even if your business is not retail, it is imperative that you focus on where the people who consume your product are and get space there.
Nothing could be more disruptive to your business move than to have new buildings projects spring up around your new space, worse still a new highway or road that takes business away from your workplace (Ideal case study would be the effect of Newlands by-pass on Newlands Shops).
Council regulations like parking payments where your business is mainly from car owners (Easipark) and other city improvements may also have a detrimental or beneficial effect on your business,.
So it is imperative that one does their homework to ascertain that access to the commercial property is not hampered, slowed or stopped.
It is highly important to have background knowledge on the general state of repair of the building you intend to move in to.
You need to check the sewer system, plumbing, roof in case of rains and electrical wiring so that nothing unexpected can happen that would stretch your already stretched small business.
It is fundamental that one talks to people at or around the location of the premises to get the general know how on what goes on at the location.
The potential small business lessee might have an option of leasing in an already existing building or a new building.
In an existing building the small business might gain from either the goodwill created by other tenants in the same building or suffer as a result of their business dealings.
The nature of the lease in existing buildings allows for minimum tenant control, they are what are referred to in layman’s terms as “standard” leases.
Rental rates, maintenance and escalation costs, utilities and building features are fixed or relatively non-negotiable.
Others choose a lease on a property that is in the planning stages, this is common practice in established businesses.
The lessee will be in a position to negotiate more flexibly his lease terms.
This could include a limitation on how many people will be allowed to carry out the same business on the complex.
One has a chance to take advantage of the usual interest that comes from the general public when a new building is opened and to create their own goodwill.
If your lease is important enough to the developer, one may gain favourably when it comes to parking space, security, prime location and some finishes may be done to your specific shop needs.
However, caution must never be thrown to the wind, such leases have in most cases unforeseen consequences, the building itself remains unseen and untested.
The track record of the developer must be vetted and his success rate vis a vis his failure meticulously evaluated.
A comparable rental rate assessed with similar existing projects must be carried out, not with just existing buildings that have been market tested.
If rental assessment is based mainly on the modern infrastructure and updated equipment that will be found on the property, then a revaluation clause must be inserted in the lease that protects the lessee in the likelihood that the developer does not deliver on his word.
This article is intended as a guide in your selection process and should never be considered as a full proof manual, other facts like personal tastes, inside market knowledge, availability and price are influential but have not been considered.
l Vengai Madzima is a property consultant and analyst. He can be contacted on 0772 468093 or e-mail: [email protected]