When selecting a property there is much to think about and decide. Just like buying a new car, there are many choices to be made. There might be two makes you like, each offering their distinct good and bad points. But at some point you must make a decision on which one will suit you best overall.
The same with property – you might find two with similar space at about the same rent, of similar standard and in the same vicinity – but how do you decide which one is for you?
Look a little closer
Look at the lease agreement and all of the clauses that define what you will pay now and importantly what you will pay in the future.
- Is there a fitout incentive or a rent-free period?
- What about parking – how many spots are available under the lease?
Look closer at the physical building
Which way do your windows face – will you get afternoon sun? Are there shower facilities or a bike parking station? Is the building about to undergo major renovations – is that a good thing or a bad thing? How will that interrupt your business? How close is the building to public transport?
Let's address some of these items
Spatial analysis. What is it first of all? It’s the process of examining the locations, attributes, and relationships of features in spatial data through overlay and other analytical techniques in order to address a question or gain useful knowledge. Simply said, to review the floor shapes, accessibility and general attributes in order to define if it can work for you.
In what geographic area is the premises and what other areas would you consider? It’s important to have in mind your ideal premises and ideal location. You must always have alternatives as this allows you some flexibility if the ideal location cannot be found. It may even provide a better long-term deal by taking premises that might be outside the Central Business District (CBD) but at reduced rent or even a new building. Staff travel profiles are very important in the decision process when assessing geographic location.
Locating suitable premises
Finding new premises is a project within a project and not something that can be done with a couple of clicks on Google. It’s a good starting point though, along with:
- Driving around the area.
- Using a commercial real estate agent.
- Utilising a tenant representative.
Commercial real estate agents have a list of their clients’ particular stock properties that are on the market for lease and they act on their behalf whilst dealing with you.
Tenant Representatives provide an alternative that I believe is far more beneficial to you than going directly to an agent. ‘Tenant Reps’ as they are known are engaged by businesses to seek out and find the best property to suit their business needs. Based on a brief that you provide, the Rep will review the market, find several prospective premises and then negotiate on your behalf to ensure that you get the best deal in the marketplace and that the building you move into has no foreseeable downsides.
Find some alternatives, this will give you the bargaining power you need to negotiate - always have other options.
Select a property – make sure it’s the best one to fit your business and ensure it ticks the key areas on your initial game plan that you developed with your team.
Let the tenant rep do the negotiating; this is what they are good at and can save you considerable time and money if they do it well.
- What is the length of the lease? Make sure that it suits your requirements. There might only be a short-term lease available because they are going to redevelop the premises - if so, is this really a great long-term prospect for you?
- Depreciation three, five, ten years. The lease period and depreciation are linked, seek advice from an accountant.
- Your choice of property needs careful weighing up.
- Do your homework, driven by plenty of research.
- Consider engaging a Tenant Representative to search and negotiate on your behalf.