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Biggest Mistakes Small Companies Make When Searching for the Perfect Space

Written by David Eseke, Associate Vice President, Industrial Tenant Representation at DTZ
IMG 0803 resized 600Now more than ever, a company’s workspace communicates the direction of its leaders. Workspace contributes to the culture of an organization and sends a message to customers. Finding a new space to lease can be exciting for small businesses, however it can also be a risky and time-consuming endeavor.

Having advised several groups in their real estate search, I have found that there are four major mistakes that can be avoided to make the entire process much more enjoyable:

1. Not Ready To Move Forward

If you haven’t ever signed a commercial lease, or it’s been a while since the last time you did, you’ll want to be prepared ahead of time. Before touring a handful of properties, it is best to have a recently updated set of financials and to know the entity that will be signing the lease. Given the velocity of transactions in the Dallas/Fort Worth market, it’s also a good idea to have a one-page information sheet that succinctly describes your core business, as well as key services/products and future growth opportunities you are pursuing. Nothing is worse than finding the perfect space and watching someone else lease it out from under you. Having updated financials will help avoid this unpleasant experience.

2. Not Planning For Growth

I love small businesses because of their optimistic outlook. There’s no better way to dampen that attitude than by signing a long-term lease that hamstrings your ability to flourish. Here are some tips in order to protect your flexibility:

  • Target properties that are owned by large, institutionally owned landlords – if you outgrow their space before the lease is up, there’s a better chance they’ll be able to accommodate you in another one of their properties.
  • Look for functional, easily changed space. It’s much easier and cheaper to move interior office walls than it is to build out new space.
  • Sign a short-term lease. Better yet, find a sublease with a quality sub landlord where there might be existing furniture and workstations you can utilize.

3. Not Using a Real Estate Attorney

This happens more often than you think. There are places to save money when negotiating a new lease, but this is not one of those areas. For less than $1,500 you can have a Texas real estate attorney review your lease and save you thousands in future obligations related to HVAC repairs, restoration of premises, and egregious operating expense language. As a small business with potentially limited financial history, you may need to personally guaranty the lease. I’d highly recommend making sure your exposure is as limited as possible.

4. Going It Alone

You’re a small business owner. You’re the CEO, CFO and social media department, you’ve got more important things to do than search LoopNet for properties that are likely already leased. Engage a hard-working tenant rep broker to save you time and money; there’s no cost to you and they’ll make the whole process much more enjoyable. Additionally, they’ll be able to give you the scoop on particular submarkets and landlords. For instance, did you know you can’t have a mailbox on DFW Airport land? Are you aware of the MUD tax in Carrollton? Plus, they can connect you with all kinds of vendors, whether you need desks or dock levelers.

At the end of the day, businesses (not just small ones) are looking to protect their flexibility, limit their cost exposure and be efficient with their time. Avoiding the mistakes above will go a long way towards accomplishing those goals.


David Eseke  BlogDavid Eseke is an Associate Vice President within DTZ’s Industrial Tenant Representation Group. Mr. Eseke focuses on business development, as well as advising clients during commercial relocations and lease renewals. This includes evaluating alternative industrial/distribution buildings, negotiating lease documents, conducting financial analyses, securing advantageous financial terms, municipal incentives and concession packages.

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