Finding and Inspecting Your Space
Finding the right property in residential real estate is a little easier than in commercial real estate. For one thing, many commercial properties are not listed in the multiple listing service. This makes it difficult to actually see everything out there without talking with a lot of realtors. It makes sense for most to enlist the services of a buyer's agent to help you find everything that is available. Agent commissions in commercial real estate are much more negotiable than in residential real estate. They'll also be able to help you determine the properties that are zoned for the type of business you're in, parking space requirements, advertising regulations, etc.
Classes of Office Space
Office space is divided into three classes -- Class A, Class B, and Class C. The classes are just what they imply, that is higher quality at the A end and lower quality at the C end. The classes are based on the age of the building, the type of construction, the location, the amount of renovation, and the amenities that the building provides. You may also run across what is now being referred to as Class E Office Space in some cities. These are old buildings class B buildings that are being considerably renovated to become spaces with a totally different look. They usually have very high ceilings, lots of large windows, and lots of wood. They seem to appeal to the high tech and dot-com groups. (Hence the "E" designation.)
The dollars per square foot will vary quite a bit from one class to the next, so consider the amenities, location, as well as the "look" you need before starting your search.
See as many spaces as you can, and pull out the list you created earlier in the planning process. Make sure you have prioritized the features that are most important to you and your business, and give them the most consideration when looking over the properties. Don't let yourself be blinded by one spectacular feature in a property when some of the other equally important features are less spectacular than what you need. You can even create a scoring system to help you compare each property equally. Regardless, of the system you use, take notes about the plusses and minuses of each site, and take photos to help keep them straight in your head. Visit the sites on your short list often and at different times of the day to observe the changes in traffic, noise, and other potential problems. Don't let your emotions rule your decision!
Don't forget to also investigate "build-to-lease" options also called "build-to-suit leases". If you find the right developer you can tailor the space to your needs and then lease it. This option will require a lot of work on your part to make sure you're getting the quality and structure that will suit your needs. Keep in mind too, that the developer you work with will probably not own the building for the length of your lease.
Inspect the Property
So you've found a good spot -- you think. You like the location. It's passed all of the tests so far. So what else do you have to look at before you sign on the dotted line? Here are some things to make sure are on your list of questions.
- First of all, how old is the building? With age can come problems and difficulties in incorporating new technologies.
- Are there structural problems? Talk with other tenants and see if they've had any problems either with the building itself, or even with the landlord.
- Does the roof leak?
- How old are the HVAC systems? Will you be dealing with periods of no air in the summer and no heat in the winter?
- Is it wired for computer networks, Internet access, or other electronic items? If not, will you have difficulty wiring it because of the types of wall materials or ceiling?
Is there adequate security? Security features can include:
- steel security doors
- security gates that fold out of the way during office hours
- alarm systems that can be monitored by a security firm or the local police department
- video cameras to watch entrances and exits
- bullet-proof glass
- fenced parking
- external lighting all around the building
- security guards
If you're buying the property you need to dig even deeper. Sometimes literally! For instance, you may need to do a Phase 1, 2, or 3 site assessment to make sure there is no environmental contamination that you will be dealing with. Sometimes the lending institute you are getting your loan from will require it.
So what do these assessments entail? A Phase 1 assessment involves reviewing the past uses of the land, and government environment records concerning the property, and a simple observation of the property. If this first assessment shows up any potential contamination or problems then a Phase 2 assessment is needed. Phase 2 involves air, water, and soil samples. The third type of assessment, sometimes referred to as a Transaction Assessment, only takes into account the use you are proposing for the site. It does not take into account any past uses or problems. This is the assessment you would need if the site has previously passed a Phase 1 assessment and had no problems.
It is also recommended by most in the real estate profession that any property, whether it is being leased or purchased, be inspected by a professional inspection firm.