Just how different is the concept of buying a house vs. leasing commercial real estate space? Let’s take a gander.
Location, Location, Location
Buying a House: When buying a house, factors to consider include location, school district, proximity to work, friends and family, away from busy streets, etc.
Leasing Space: Location is also very important when leasing space. Nearness to highway, public transportation, street view (for retail space), drive-time for employees, and ease of access to clients are all factors when deciding where to locate.
Buying a Home: Sometimes you have to tour 10-15 houses before finding the right fit for your family. You work with your agent, who has the keys or codes to the lock boxes so you can tour a house. You see a lot of ‘interesting’ decorating styles through the various houses. Your agent guides the tour and you never see the agent that represents the house. Sometimes, the family that currently lives there is in the house while you tour it. It can be uncomfortable when you are trying decide if a house is right for you while there’s a child from the existing family running around with his head stuck in his shirt!
Leasing Space: When you are ready to lease space, you also have to tour relevant properties that may be a fit. Sometimes the existing tenant is still in the space and you are walking through while they go about their business, typing while you are trying to focus on the amenities you are being told about. Sounds similar, however, it gets a little different. There usually isn’t a lock box for the agent to open, rather they have to contact the landlord or their representation to allow you into the space. Oftentimes, it is the landlord or the landlord’s agent guiding the tour. After all, they know the building (or should know the building) better than anyone else.
Buying a Home: When you are looking for a new home, who your neighbors are will be an important factor. However, they aren’t always out trimming their hedges when you tour the house. Thus, you may not get to know your neighbors prior to actually buying.
Leasing Space: This is where the two differ. When leasing commercial space, you have the advantage of being able to do some research on your neighbors. More than likely, they are businesses and have a website. You can search for them to see if they are a good fit to locate next to, or if they will be direct competitors. It doesn’t hurt to check up on them prior to moving next to them. In both buying a home and leasing space, who knows what part neighbors will play after the transaction!
Buying a Home: If you’ve ever purchased a home, you know that the day of contract signing, your wrist is going to get sore. You have to put your John Hancock down at least 100 times on various forms. The contract signing process differs per state; sometimes your agent is present and the sellers are present, sometimes you do it in a room with legal counsel. For the most part, you can read through the contract and understand what you are getting into.
Leasing Space: For commercial leases, the contracts are not that simple. Here are some of the distinctions between residential and commercial contracts:
No standard forms. Many commercial leases are not based on a standard form or agreement; each commercial lease is customized to the landlord’s and tenant’s needs. As a result, you need to carefully examine all the aspects of the lease including term, payments, improvements, etc.
Long-term and binding. You cannot easily break or change a commercial lease. It is a legally binding contract. Plus, commercial leases usually entail a good deal of money.
Negotiability and flexibility. Commercial leases are generally subject to much more negotiation between the business owners and the landlord, since businesses often need special features in their spaces, and landlords are often eager for tenants and willing to extend special offers. This is where a good commercial agent comes into play. They will be able to assist you with the leasing process and negotiate on your behalf.
As you can see, there are some similarities between buying a house and leasing commercial space; the basic needs are the same, but when you get down to the nitty-gritty, commercial real estate is much more complex. A great agent can help with either process. To find a qualified agent, visit www.cbcworldwide.com.
By John Boyer, Director of Marketing, Coldwell Banker Commercial Affiliates