Ask Questions Before You Buy, Build Or Lease Space

A company's commercial space can be its greatest asset, or it can be the anchor that sinks the entire enterprise.

The decision to buy, build or lease is a crucial decision a business owner must make, and we're here to help you make it with seven questions you need to ask before signing a contract.

1. What is the financial/cash position of the company?

Buying a property will require significant cash up front, and building new will require even more. Leasing might be the right choice if your business is lean in the cash department.

2. How does your commercial space interact with how you make money?

Are you selling products to customers, requiring significant foot traffic, access to parking, etc.?

Look introspectively and recognize how your commercial space helps you make money. Needing only a phone line and a few laptops is different than needing a manufacturing plant. Don't overspend on your real estate if you don't have to. 

3. Where is your business in its life cycle?

Have you been established for 50 years? If so, buying a property might be cost-effective.

Are you a startup? If so, then perhaps you'll want to spend money on development or other priorities rather than buying or building your physical plant.

4. What will your business look like six months, a year or five years after you select your commercial space?

Will you need to retrofit your space with specialty equipment, and if so, can you take that equipment with you if you eventually move the business?

For example, if you need to install a commercial hood system for a grill or construct a trucking dock and/or parking lot, if you're leasing the property, you will not see the return on those capital investments.

5. Do you anticipate growing your business, and if so, what will it look like?

Will you need additional space for more employees? Will you produce new products that will need manufacturing space? Will that growth require upgraded water/sewer/utilities systems?

If the answer is "yes" or "maybe" to any of these questions, then you may be better off avoiding a lease.

6. What do the local ordinances require?

If you're thinking of building new or adding on to an existing property, be sure you're aware of zoning requirements.

Will the city or town allow you to construct the facility your business needs? 

7. What are your ultimate goals for your commercial space?

Is it simply the space you need to operate your business? Is it intended to be an investment you expect to generate a return on? Or is it part of the legacy you'd like to build and pass on to your children and grandchildren?

Buying, building new or leasing commercial space is a big decision. But by asking yourself the key questions, the answer might be easier to come by than you first thought.