Katia Lavoie | Journalist
Very few business people take the time to get clear on their needs and selection criteria before visiting a commercial building. How do you find the perfect property if you don't really know what you're looking for?
Whether you're thinking about buying or leasing, the process is the same. The choice will be clear at the very end. To save time, you should give some serious thought to the matter before you go through the various steps.
Jonathan Moisan, a commercial real estate broker with Bender & associés, has 5 tips to help you conduct a more effective search.
1. What's your situation and what are your short-, medium-, and long-term projections?
- You should plan 3 to 5 years ahead, sometimes even as much as 10 years. If you anticipate business growth, it might mean you'll need more staff, extra offices or additional square feet for storage.
2. What's your timeline?
Your timeline influences the way the project will be handled. "In real estate, the more time you have, the more leverage you have," says Moisan.
If your lease expires in 3 months, the clock is ticking. You have to act urgently so you don't find yourself without office space. On the other hand, having a year to find new offices means that:
- A competition can be established between owners
- You have longer to negotiate
- You can get more complete information to help you make your decision, both for buying and leasing
3. What are your selection criteria?
"The building cost and location are generally the main criteria," says Moisan.
Other factors include:
- Local services
- Construction quality
This exercise will help you narrow your search.
4. What are your needs?
This is mainly about internal needs. Here are some of the things you'll need to think about:
- Number of workstations that will be set up in the open area, if applicable
- Number of meeting rooms and closed offices
- Possibility of a full kitchen
You'll use all this information to estimate the space you need.
Go beyond the obvious. If you have meeting space but don't use it very often, it might make more financial sense to rent occasional space somewhere else in your building or outside.
5. What's your current and future real estate budget?
A specific budget, combined with your square-footage needs over a set period, will help you evaluate the annual cost of leasing or buying.
Don't forget to include the following expenses in your budget:
- Recurring building maintenance and management costs (if you buy)
- Renovations needed to adapt the space for your business
- Building upgrades
Leasing: the most popular option
Based on Moisan's experience, most clients decide to lease after going through the process, even if they've evaluated both options.
"When you look at the fiscal year, it often costs less to lease than to buy if you also take annual costs into account," says Moisan. You have more flexibility when you lease.
Companies that have a lot of liquidity, like those that have practically only a list of clients or are really stable in terms of staff and business are the best candidates to buy. However, if the company grows, it might make more sense to reinvest that money directly in the business.
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