Whether you need a retail space because you’re launching a new business, entering the Houston market for the first time or moving out of your existing location, the space you choose can set you up for success – or for failure. Make sure you’ve done your homework and answered the following questions before you sign on the dotted line.
How Much Can You Safely Afford to Pay?
One of the most disastrous things a business owner can do is create a situation where high overhead costs make it tough to make ends meet. Especially if you’re starting a new business or expanding into a new location, it’s wise to take a conservative approach to budgeting. Before you commit to a retail space, work with your accountant or financial adviser to identify whether it makes better sense for you to purchase or lease a retail space. Then, identify the maximum monthly rent or commercial mortgage payment you can afford to pay. Identify your expected staffing and inventory costs and come up with a maximum monthly rent or mortgage budget that you’re confident you can comfortably meet.
How Much Retail Space Do You Need?
Commercial real estate space leases per square foot; if you choose a space larger than you need, you’ll be throwing money away. On the other hand, if you purchase or lease a retail location that you eventually outgrow, you’ll feel crowded and disorganized and could lose business if customers sense that. A smart strategy is to calculate how much space you’ll need to comfortably conduct business with the number of employees you currently have. Then, realistically consider your anticipated sales projections. If you anticipate rapid growth, depending on what type of business you run, you may need to add employees and inventory – which will require space.
What’s The Ideal Location for Your Business?
Depending on what business you’re in, location may be the most important consideration when you’re looking for a retail space. Foot traffic, visibility, convenience and ease of parking – or lack thereof – can make or break a retail business. If you make the wrong decision, even if you discover your mistake shortly after opening your business, you could be stuck unless you build some protections into your commercial lease before you sign it.
Even when you’re confident you’ve chosen a winning location, you should make sure your commercial lease contains a clause allowing you to cancel your lease if income projections haven’t come to fruition by the six-month or one-year lease anniversary. Another way to build a layer of protection is to opt for a short-term (year) lease with an option to renew included in your contract.
Is Your Business Restricted from Setting Up Shop by any Local Laws?
Houston is the largest U.S. city that lacks zoning laws; that will simplify your real-estate search. However, keep in mind that if you search for property outside the official Houston city limits, such as in Katy, Sugar Land, Conroe, Spring, or The Woodlands, you will likely encounter zoning laws. Despite Houston’s lack of zoning laws, the city’s code of ordinances does include myriad restrictions that could conceivably affect your ability to lease or purchase a particular retail space.
For example, if your business will sell alcoholic beverages in Houston, you cannot lease a space within 300 feet of any church, public or private school or public hospital. If your Houston business will use hazardous materials on site, you’ll need a permit. The city will only issue these permits to businesses located in areas where one-third or less of the tracts are residential. Houston also enforces noise ordinances and requires commercial pet service facilities to be licensed, etc.
Are You Working with A Pro Knowledgeable about Commercial Real Estate?
You’re a business owner. You’re an expert in whatever field you’re in, but you’re not a real-estate broker. Commercial real estate brokers are experts who can let you know the inside scoop about the areas you’re considering and can help you negotiate the best deal. If you’re in the market for commercial retail space for your business, trust the pros at The J. Beard Real Estate Company. We’ll help you find the ideal space for your unique business.