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Thaddeus Minshall
Where you choose to do business is an important decision that may be influenced by several factors. While “location, location, location” is paramount in many cases, it is not the only element in the commercial real estate equation, particularly as more businesses engage in work that can be conducted nearly anywhere.
In evaluating potential business locations, a routinely overlooked consideration is property management. Everyone loves a shiny new building, but few take time to investigate and assess how well that building is likely to be maintained in the years to come. For those eyeing a move, here are a few tips to help ensure you make a location decision you will be satisfied with in the long run.
First, closely survey your surroundings. Most likely, you will be visiting a few properties with your broker. Take time to explore. Are all the common spaces clean and well-maintained, or are there cobwebs in corners and stained ceiling tiles above dirty carpets? Is the parking lot clean or is it littered with trash? These details can give you a sense of what you can expect from your property manager. If there are maintenance issues visible to the naked eye, the things you cannot plainly see may – electrical, plumbing and HVAC systems – could be in poor shape. Make your walk-through matter by observing and absorbing your surroundings.
As you do so, be sure to assess spaces in context. A building that is 30 years old is never going to look brand new. However, if your visual inspection reveals a clean public area, lobby, elevator and exterior, it may be that your long-term tenant experience will be better in this well-maintained older building, where pride in ownership is on display, than in a brand-new building that an absentee property owner has no plans to care for beyond bare minimum requirements.
But You Can’t Control Everything
Next, if possible, strike up a conversation with an existing tenant. If they have spent years doing business at the commercial property you are considering, ask them about the last time they had an issue. Did the property manager promptly address the matter or do everything imaginable to skirt it? Was the adjustment or improvement made without charge, or was the cost of the move passed along to the tenant? Many commercial property leases include clauses that enable property owners to charge tenants for unexpected maintenance needs, so it is important to consider this factor when evaluating a property’s true long-term cost.
Beyond your own sleuthing work – or if you do not have time to undertake it – use your broker to gain a better understanding of a commercial property owner’s reputation. Are they known for haggling with tenants – or worse, ignoring them – on property management issues or are they considered conscientious? Your broker should be able to find referrals for you that will help you get a better sense of whether a commercial property you are considering is operated by an “always here to help” property manager or a “you’re own your own” ethos.
Finally, recognize the limitations on your control as a tenant. In most cases, there is nothing stopping a commercial property owner from selling that property to another entity, which may be a pro or con for you, depending on the buyer. However, if finding a reliable partner is important to you as you consider your business’ location, a little bit of research can help you to differentiate “here today, gone tomorrow” owners from those who are invested in the long-term stability of a property. Often, the latter will make a significant effort to engage with the local community.
All this matters because, most likely, you are looking for a long-term home base. Moving your business takes time and resources. It is not a process to undertake frequently, so it is useful to find a location where you will feel good about conducting business not only on moving day, but also in year 10.
Thaddeus Minshall is vice president of real estate/development at Connolly Brothers Inc., a construction management, planning, design and development firm.
