A. How to Find Space on Your Own

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1. Enlist the Help of

Personal Contacts

Because some of the best opportunities

come via word of mouth, ask friends and

other business contacts if they know of

available space. Explain your rental space

priorities either by phone, in person, or by

sending a note. (You can even attach your

Rental Priorities Worksheet if you wish.)

Start with business owners—particularly

those renting space in the part of town that

interests you. They may know of enterprises

that are moving or folding long before the

vacancies are listed in newspaper ads.

There are advantages to being at the

head of the pack. Landlords hate to

have periods of vacancy, during which they

have no rental income. In exchange for your

readiness to commit to a rental before it becomes vacant, a landlord might be willing to

cut you a better deal on improvements or rent.



Your business advisors—lawyer, accountant, and insurance broker—may also have

good leads on space that’s about to become

available. And if you attend meetings of

your chamber of commerce, community

service group, or trade organization, spread

the word that you’re looking for space. It

pays to be imaginative. One tenant we know

called the area’s largest commercial janitorial

service, which told him of a couple of

businesses that had recently canceled their

service contracts in preparation for a move.



2. Do Your Own Space Scouting

The decidedly low-tech method of pounding

the pavement still works. Go to the neighborhoods where you might locate and spend

some time driving or walking the streets to

see what’s available. You may see signs in

windows or on buildings advertising space

that you won’t learn of any other way. Some

landlords prefer to market their vacancies

that way, figuring they can save on advertising costs and broker’s commissions.

As you cruise the streets and sidewalks,

don’t just look for vacant space. A store,

studio, office suite, or workshop that’s

perfect for your business may be occupied

by a tenant who is going out of business or

moving to another location soon. Take a

peek inside building lobbies to see who

rents there. If you find a desirable location,

ask people in the building if they know of

any space opening up soon. You may learn

of someone who is about to move on.

There’s a lot of turnover among small businesses, and you may get lucky.

Exploring a neighborhood at a leisurely

pace also gives you the opportunity to

closely observe traffic patterns for both

vehicles and pedestrians. For example, if

your business relies on customers arriving

by car, you’ll want to see how difficult it is

to find parking—important information to

know before you get too far into lease

negotiations. Be sure to do your investigating

during normal business hours.



LOOKING FOR SPACE AND USING BROKERS



3. Contact Landlords and

Management Companies Directly

In areas that are in high demand, you may

need to get more aggressive in your search

for available space. Instead of waiting for

rentals to come on the market or even hit

the grapevine, go right to the landlord and

find out what properties are likely to become

vacant.

Current tenants in desirable rentals may

not want to give you the landlord’s name.

A tenant may be concerned that, when his

lease is up, you may appear and start a

bidding war. A simple way to find the

owner is to note the address and look up

the property in the property tax office in

your city. The owner’s name and address

should be listed.

Next, visit the landlord’s office. You may

learn of a lease that’s about to expire and

you may be able to offer terms that will

beat the current tenant’s deal. Or, perhaps

the best you can do is join a waiting list.

You never know what will open up.

In addition to contacting landlords directly,

consider speaking with management

companies in your town or area. These

companies perform the day-to-day tasks of

running the building on behalf of the landlord. Often, they are in charge of leasing,

too. Because they work for the landlord,

they have every incentive to talk to potential

tenants. Management companies are listed

in the Classified section of the phone book,



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and they often have their own signs in the

buildings they manage.



4. Check Classified Ads:

On Paper and Online

For-rent ads in newspapers are an obvious

place to look. Traditionally, the Sunday

edition of the local paper contains the most

ads for commercial space. The classified

ads sections of major newspapers are often

available online.

In addition to newspapers, be sure to

look online for information on commercial

rentals. Many sites have property descriptions

that are accompanied by videos or photos,

giving you a preview of the space before

you even leave your chair.

Almost any major search engine will lead

you to sites with information on commercial

real estate. For example, we tried Yahoo!

and, on the home page’s web directory,

chose the category “Business.” We next

went into the subcategories of Classifieds,

then Real Estate, then Commercial Properties.



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NEGOTIATE THE BEST LEASE FOR YOUR BUSINESS



Many sites appeared in the final category,

including classified listing services and

brokers, giving us the ability to search for

listings by type, region, and size. Several allowed us to specify our requirements (such

as square footage and maximum rent), then

customized the results of our search.

An especially useful site is the one at

www.realtylocator.com. After choosing the

Commercial Real Estate link, you’ll come to

a page listing “Directories”—sites that list

properties, investment and development

groups, and more. Again, many allow customized searches based on geographical

area and rental amount. Also, check out

www.sior.com, maintained by the Society

of Industrial and Office Realtors, with information on experts and properties for lease.



5. Read Trade Publications

Landlords save money when their renovation

costs are low. One way they minimize

improvement costs is to consistently rent

finished space to the same type of business.

This means that there will be no or minimal

construction work necessary for successive

tenants.

EXAMPLE: Years ago, Wellkept Properties



installed commercial kitchen facilities at

one of its properties. The property was

occupied by a succession of restaurants,

which varied the décor but not the layout of the food preparation and storage

areas. Wellkept can rent the space to



restaurant tenants at favorable rents since

it has spent little money on renovations.

If tenants want to substantially redesign

the seating areas to put their personal

touch on the place, the tenants will pay

for these improvements themselves.

Trade publications are the natural place

for a landlord to advertise finished, businessspecific space. For example, a magazine

aimed at professional chefs and restaurant

owners will often carry ads for improved

space previously used by a restaurant.

There are magazines aimed at almost every

business niche—import car repair shops,

garden stores, and coin-operated laundries,

to name just a few. To learn whether a

publication targets your business area, go

to your public library and ask for the

following (unfortunately, they’re not yet

available online):

• The Periodical Index. Check the Subject

Matter headings for your business. For

example, a commercial laundry

owner would look under Laundry or

Sanitation.

• The Standard Rate and Data Service

publication. This book lists the address

and phone number of each trade

publication—a terrific aid because most

of these industry-specific magazines

can’t be found at your local newsstand. You’ll need to order the latest

issue directly from the publisher.

Look for trade publications online, using

a search engine such as Yahoo!. To followup with our restaurant example, we went to



LOOKING FOR SPACE AND USING BROKERS



Yahoo! and chose Business on the home

page; then went into the subcategories of

Business to Business and Food and Beverage. Sure enough, we found an entry for

restaurants, which led us to a page with

several links to online publications. Some

of them included classified listings.



B. Working With a Real

Estate Broker

Many small business owners have easily

found space on their own and negotiated

the terms of the lease with the landlord.

Many others, however, have preferred to

get help from a professional real estate

broker. You may decide to work with a

broker in any of the following situations:

• You’ve searched long and hard but

haven’t turned up great space at an

affordable price.

• You have limited time available to

look for space and would find it

convenient to have someone else

help narrow the field for you.

• You’ve had no experience in searching for space or dealing with real estate matters and you feel a bit intimidated by the prospect of doing it all

by yourself.

• You’re worried that you’ll encounter

experts working to protect the landlord’s best interests—but no one will

be looking out for you.



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Well, here’s good news: It’s almost always feasible to hire a real estate professional in the form of a broker who will

represent your interests. And there’s even

better news: Often it will cost you little or

nothing to get the benefit of the real estate

pro’s services. In this section and those that

follow, we’ll explain:

• what brokers do

• broker licensing

• how to find and choose a broker

• how to work with and pay a broker,

and

• how to deal with problems with a

broker.



1. Who Can Be a Broker?

To act as a real estate broker, a person needs

to get a license. The requirements vary from

state to state, but usually involve passing an

exam, taking continuing education courses,

and adhering to strict rules issued by the

state legislature or an administrative commission.

Real estate brokers often employ or

contract with (and supervise) state-licensed

salespeople. The requirements for becoming

a salesperson are less rigorous than those

for a broker. In this chapter, we use the

term “broker” generically to cover both

brokers and salespeople. The term “agent”

is also widely used to cover both types of

real estate professionals.



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NEGOTIATE THE BEST LEASE FOR YOUR BUSINESS



Different Roles for Brokers

Since brokers can function in different ways,

it pays to know exactly what role a broker is

playing in a landlord-tenant transaction.

Here are some guidelines:

• Broker—The generic term for a licensed

intermediary who is working to get a

landlord and a tenant to the point of

signing a lease.

• Listing Broker—A broker who’s under

contract with a landlord to find a tenant

to fill a vacancy. The listing broker’s

sole legal obligation is to the landlord.

A listing broker who finds a tenant and

gets a lease signed is paid a commission

by the landlord—usually 3% or so of

the rent over the life of the lease.

• Nonlisting Broker—A broker who’s not

under contract with a landlord but produces a tenant who eventually signs a

lease. Usually the listing broker and the

nonlisting broker split the commission.

Unless other arrangements are made,

the nonlisting broker is an agent of the

landlord and—like the listing broker—

isn’t obligated to look out for the

tenant’s best interests.

• Tenant’s Broker— A broker who agrees

to represent only the tenant, the best

option for a tenant who wants a



broker’s full attention and undivided

loyalty. If the space you end up leasing

was listed with a landlord’s broker,

normally the landlord pays one

commission, which is shared by the

landlord’s broker and the tenant’s broker. But if you lease property that hasn’t

been listed, the landlord may not be

willing to pay a commission to your

broker. In that event, you must pay the

broker. It’s best to address the issue of

payment in advance in a written

contract between you and your broker,

as described in Section F, below.

• Dual Agent—A neutral broker who tries

to work for both the landlord and the tenant in the same transaction. The broker’s

main duties tend to be mechanical—

making sure that the lease details are

worked out smoothly. Being fair to both

sides can be a challenge. Because of the

potential for conflict, some states don’t

allow brokers to be dual agents.

• Realtor—A broker who’s a member of

the National Association of Realtors. The

word “Realtor” has been trademarked

by the Association. Brokers do not have

to be Realtors.