Finding the perfect office space for your business
Here’s what you need to know to find the location you deserve
by Alix Kemp
The Alberta Boot Company spent the better part of 30 years in downtown Calgary, a location considered by many to be prime real estate thanks to its visibility and the surrounding community. In fact, you could say that desirability is precisely why it left. Ben Gerwing, the company’s vice-president, says the company received multiple inquiries from developers over the years who hoped to build condos. “Finally someone came through with a ridiculous offer,” he says, “so we figured it was time to get out of downtown.”
The company could have moved to another downtown spot, but opted instead to free up the capital and move to a less expensive location a little ways south. “It was a chance to cash in on the value of that property and put it towards the manufacturing of the boots,” Gerwing says. There are trade-offs, of course – walk-in traffic at the new location is lower than it was downtown, and Gerwing says that even though the company has been in the new space for five years, some longtime customers still forget that it has relocated. But the Alberta Boot Company was never very dependent on foot traffic, and was more of a destination for shoppers. In fact, the new location is more convenient for anyone who doesn’t work or spend a lot of time downtown.
The company’s story is a telling one, and here’s what it says: Choosing the right location for a business isn’t always as straightforward as finding the nicest space at the best price. Instead, it’s highly dependent on what you’re hoping to achieve in the near and medium terms, and on your long-term goals. If you’re thinking of buying or leasing a new space for your business, here are a few things to keep in mind.
To broker or not to broker
Illustration Pete Ryan
Should you hire a broker? It depends who you talk to. Paul Gibson, co-founder of Edmonton’s RedBrick Real Estate Services, a real estate brokerage, project management and development company, says yes. “This sounds somewhat self-serving,” he says, “but brokers know the market, they know the > pitfalls to watch for, they know the landlords and they can get into the lease and provide some very insightful solutions to some problems you may have.” Paul Logan, a real estate lawyer with Blake, Cassels & Graydon in Calgary, agrees that a broker can help, but says they’re not always necessary. “Some people, given their circumstances, might not need that help,” he says. “They might be in a renewal situation, or they might be very comfortable with real estate.”
Allan Zivot, a Calgary-based principal with the commercial real estate services firm Avison Young, says if you do hire a broker, the key to a successful transaction is making sure it’s someone you’re comfortable with and who knows your business objectives. “The prospective client needs to develop a relationship with the broker so they’re working as a team,” he says. “You can interview an agent, and make sure they understand the market, make sure they’re a good listener, and that they understand your business.”
The fine print
Illustration Pete Ryan
The key to being happy in your new space is negotiating a lease you’ll be happy with over the long haul. If you’ve chosen to hire a broker, they can make this process much easier by negotiating on your behalf. Either way, though, Logan says the key to a success- ful negotiation is to be clear on what your needs are and what isn’t so essential. “Keep in mind what’s important to each party and don’t let the small stuff get in the way of the big stuff that’s important to both parties in the negotiation.”
It’s also important to pay attention. This might seem obvious, but Logan says many small businesses end up being surprised by the terms of their lease. “One of the things that we sometimes see is that if people haven’t kept their eye on the horizon, five or 10 years down the road they might find something in their lease that they didn’t really like.” For instance, leases often contain a change of control provision that requires businesses, in the event of a merger, sale or business restructuring, to get a landlord’s permission before transferring the lease to a new entity. It’s essential to be aware of those provisions, as failing to abide by them can result in eviction.
Let’s do that again
Time to renew your lease? This can be as simple as just triggering the renewal and maybe asking for another renewal option when the current one expires, but Logan says it’s also a good opportunity to renegotiate. “Don’t rush into it without thinking through your options,” he says, whether that’s finding a new space or just opting for a longer renewal period of eight or 10 years instead of five.
A long-term commitment?
Illustration Pete Ryan
Whether you buy or lease your space is going to be largely dependent on what’s available and how long you plan to be there, as well as some financial considerations. If you can afford a down payment, owning your space can provide some advantages: your company gains an asset, and you can alter the space to your heart’s content. But it’s not right for everybody. For one thing, the overwhelming majority of commercial space is for lease, not for sale, so if you’re set on purchasing property it may mean opting for a less desirable location. That’s a big risk for newer businesses that depend on a visible, easily accessible location to attract customers. Leases are also much more flexible for fast-growing companies that may need more space in the coming years. “You’ve really got to look ahead,” says Logan. “It’s not what happens tomorrow in the space. It’s what happens five or 10 years from now.”
Leasing may also give you a bit of leeway if you do choose a space that’s too small to accommodate your growth. In that case, Gibson says most landlords will try to give you a hand. “A landlord will always try and find you additional space if you want it. They’ll forgive a 1,000-square-foot lease to put you into a 5,000-square-foot lease. The risk runs that they might not have a space at the time.”
Looking for a short-term space or just want to save a few dollars? Subleasing can, in some cases, be a good alternative to the traditional leasing arrangement. “If someone is sub- leasing their space, they’re generally either in financial trouble or they’re outgrowing their space and need something else,” Gibson says. “Often, they’re just trying to recover costs and they’ll take a lower rate.” There are some pitfalls, however – subleases generally have shorter terms and aren’t renewable, and you won’t have a direct relationship with the building’s landlord or as many options when it comes to customizing the space.
All About Location
Illustration Pete Ryan
There’s more to selecting the right space than just knowing the ins and outs of leasing. The key to a good location is, well, location. So what goes into picking a good spot? It depends what kind of business you’re putting there.
There’s more to finding a great office location than just its proximity to clients and free parking. “Parking is a bit of red herring,” Gibson says. “It depends on your client base and your customers.” More important, he says, is proximity to amenities that will make your office work for your employees. Consider your location’s proximity to things like gyms, restaurants and retail shops for lunch-hour and after-work recreation or errands. “A lot of people think it’s just a place to go and sit and do work, but an office is way more than that,” Gibson says. “You have to enjoy where you’re going; you have to be able to have a good quality of life when you’re at work.”
Most retail store, cafés and restaurants depend on foot traffic, and Gibson says there’s an easy way to tell whether the location you’re considering will be good for business. “The best way to select a retail location is to go around the lunch hour and just sit there for two hours and look at the foot traffic. Do the same thing when people are getting out of work and again in the mid-evening.” You’ll also want to take a look at transit accessibility, and whether the buses that go through the area are primary routes, or less-frequent ones with fewer riders.
Zivot says selecting a good industrial location tends to be simpler than office or retail space. “Industrial in most cases is more of a homo- genous product as opposed to office space,” he says. Still, you’ll want to consider a few factors, including your proximity to suppliers, customers and the infrastructure to transport your goods.