While real estate costs and availability greatly from city to city, there are some ways to find an affordable place from which to run your business regardless of where you are located.
Consider these five ideas when seeking and negotiating office space:
If you are dealing with an agent when looking at space for rent, it`s important to remember that he or she represents the owner or the landlord. In that role, the agent will try to arrange the best deal for his or her client — not necessarily the best deal for you. Consider getting a broker or lawyer who will only look out for your best interests. Make sure your representative double checks the information provided by the other agent — such as whether the square footage is correctly stated.
Consider subletting space from a downsized company
The current downsizing trend often means empty office space. According to the July, 1997 issue of Inc. magazine, such space is being sublet at discounts of up to 25 percent. Watch for articles in you local newspaper and other business publications about companies that are reducing the size of their workforce. It may be worth your time to contact their facilities` manager to see if any sub-leases are available.
Go where the opportunity is
If you are open to the idea of relocating your business, consider an area trying to attract new business. Many communities offer incentives to relocating businesses such as tax abatements, low-interest loans and other amenities. Check with the Chamber of Commerce in cities you are considering to see if such incentives exist. The U.S. Small Business Administration may also be helpful in identifying markets where there are real estate “gluts”. The law of supply and demand will work in your favor when bargain hunting in areas with an overstock of business space.
Consider a “roommate”
Depending on the nature of your business, you might consider sharing a facility with another business. If you identify another company with which your work closely, perhaps you would be a good match for teaming up on office space. For example, if your company does video production, a video duplication house might be a good candidate for sharing facilities. By combining the lobby, kitchen and office machine areas, you could see considerable savings on space and even on equipment.
Strike a deal with a client
When seeking out office space, look to a client with room to spare. You might be able to work out an arrangement where the product or service your provide the clients is discounted in return for office space. A word of caution, though: make sure you create a contract or lease reflecting the arrangement in the event that your relationship with you client changes.
Getting it in writing
Before signing a lease, make sure your best interests are considered. Even the most desirable real estate market, there are some things you should do to drive a hard bargain. Here are a few:
• Request a cap on rent increases. Make sure the amount is fixed and not based on an unknown index.
• Get a cancellation clause. If you want a shorter lease than the landlord requests, negotiate the right to cancel if you pay for unamortized costs.
• Make sure you have the right to renew. Try to lock in the renewal rate, if possible.
• Ask for the right to sublease. If your situation changes, you want to be flexible to relocate.
Location, location, location
The most important thing to remember as you look for office space is to be discriminating about the things you can`t change. If clients regularly come to your office you may not want to consider space in an undesirable neighborhood or an inconvenient location. Once a lease is signed, you can change the facility, but not the location. Carefully consider the whole package — not just the cost — as you make your office space decision.
Gary N. Garner is a personal financial advisor with American Express Financial Advisors in Jackson.
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