Quite a few years ago, a close friend and I were in preliminary talks about starting our own law firm. We live in New York City so without even thinking about it, we just assumed the location would be in Manhattan. But then one spring afternoon I went to Brooklyn Heights for a doctor’s visits and was totally blown away! I thought this was where I absolutely had to have my practice. Here was an area that was cosmopolitan without the crazy hustle and bustle of the New York City streets. It had the perfect restaurants for business lunches and we would only be a few blocks from the river front if we ever needed to take a break from the stresses of the daily grind. To me, it was perfect!
But, though Brooklyn Heights has always been posh, my friend believed that having a Brooklyn zip code would automatically put our firm in the second tier category (this was happening a couple of years before Brooklyn became a hipster’s paradise for the elite). Unfortunately, this difference in views was only one of the many things that separated my friend and me and in the end we decided to give up on the idea of the firm altogether. However, the issue surrounding the location of your business a serious one for anybody who is thinking about signing a commercial lease.
Actually, according to Susie Algard,
- For some businesses (though not all), your location not only affects your customers’ ease in finding you, it “may be important for attracting talent, situating yourself strategically among complementary and competing companies, establishing your brand and so forth.” Your location will also affect the rent you currently pay and will pay in the future. So, it’s important to “keep an eye on the local office market to get a general idea of rental rate trends”.
Of course, if my friend and I had moved beyond the preliminary stages of opening our firm, the other issues would include the type of space we would need and our rent.
- Though landlords will give some incentive for longer term lease, this does not automatically mean an extended lease term is something that is best for your company. Per Algard, “brokers will admit their clients do not negotiate carefully enough”.
- If, however, you want the landlord to pay for significant changes and improvement to the space, then you should definitely expect a longer term lease. After all, the landlord will seek repayment by “amortizing the improvements over a longer period of time”.
- Of course, you could always negotiate a short term lease and pay for your space improvements out of pocket.
- Either way, you should always think carefully about how our space needs will change over time before signing your lease.
For those of you who are not familiar with reading commercial leases, here is a FREE checklist of the basic things you need to look for.
