Law Tips: Office Space – Lease or Purchase?

What are your considerations before leasing commercial office, retail or industrial space?  Do you have an up-to-date checklist?

In our Law Tips space today, I am happy to share expert advice in this area from William E. Wendling, Jr. of Campbell, Kyle and Proffitt in Carmel, Indiana. During our CLE on Developing and Representing the Business Entity  Bill provides these relevant tips for determining whether leasing is the right answer:

Business decisions should never be made on an impulse. When it comes to selecting a location for your business you need to be compulsive. Make a checklist before looking at commercial spaces of all the things that your business needs to succeed and take it with you.

If you have not already written a technical feasibility study, consider doing so. A technical feasibility study can help you think about, plan, and address all the needs of your business that need to be considered when leasing commercial business space.

If you are looking for commercial space that can serve as store-front operations or for walk-in business services, it is especially important to make note of all the following considerations:

Property Maintenance: Is the park maintained well? Run-down parks not only will make your business seem less established, but may also be an indication of an unresponsive landlord.

Visibility to Your Customers: Can the front of the unit be seen from a main road? If not, does the park have a street-visible sign advertising the businesses in the park? If you are considering retail or industrial space, or renting in a business park, does the owner advertise on behalf of tenants to draw in traffic?

Parking: Is there ample parking? Seeing an empty parking lot during after-hours does not tell you anything about parking. The best way to know is to visit the park several times on different days at different times. A parking lot filled to capacity during normal business hours may be a good indication of steady customer traffic, but it may also mean your customers will have trouble parking. Be sure to ask how many spaces you and your customers will be assigned.

Accessibility for the Handicapped: Is the building wheel-chair accessible? Are there reasonable and sufficient parking spaces assigned for handicapped drivers? It is the law in all fifty states that there be designated parking for persons with handicaps, and if there are no such accommodations, ask why not, and if they are planned.

If a landlord has to make updates to the building or other facilities to comply with public access laws, your landlord may be able to pass some of these renovation costs along to you!

Safety and Insurance Issues: In almost all commercial leasing situations, you will not be permitted to move in without general commercial liability insurance. If you sign a lease, and find you cannot get insurance, you may still be stuck paying for the lease.

Some of the safety and insurance-related considerations include: Is the area safe and secure, with ample nighttime lighting? Are lighting fixtures broken or in need of repairs? Is there an alarm service or on-site guard? Are police and fire departments nearby? Where is the nearest fire hydrant? Are their sprinklers and smoke/fire alarms in the building?

These concerns not only affect you and your customer’s personal safety, but can also affect your ability to get insurance, the amount of coverage you can get, and your insurance rates.

Advertising Restrictions: Are there any restrictions on signs such as size, color, lighting, or do you have to use a landlord’s vendor?

Restrictions on Business Use: Are there restrictions on the type of retail business you can operate, or how many customers you can have daily, or your hours/days of business operation?

Hopefully, these pointers for being thorough in leasing decisions provided you with helpful reminders or, perhaps, a red flag that saves you from a detrimental situation. There are, of course, the issues to be weighed on the buying side of this equation (which will have to be another day’s blog).

That brings us to Mr. Wendling’s overall advice on covering your bases: “The answer to lease or buy office space is not clear-cut. Your decision will hinge on financial, tax, and personal issues. Do not make this decision sparingly. Bring in your accountant and financial planner to guide you with the best advice.”

If you are interested in Bill Wendling’s full presentation with relation to the pros and cons of leasing or buying space, check out the On Demand or Video Replay Seminar of Developing and Representing the Business Entity” by Clicking Here. This CLE includes an expert panel covering the full spectrum of Business Law topics, from Entity Structure to Drafting Customer Agreements.


About our Law Tips Faculty Member:
William E. Wendling, Jr. is a partner with Campbell Kyle Proffitt LLP, Carmel, Indiana.  He obtained his law degree from Indiana University and was admitted to the Bar of Indiana  in 1983. Mr. Wendling’s practice is concentrated in litigation, including both civil and criminal matters, and he is a registered mediator in domestic and civil matters. In addition, he practices land use law and previously served as the attorney for the Carmel/Clay Plan Commission and Board of Zoning Appeals. Prior to becoming an attorney, he was a real estate broker concentrating in commercial development and office building management.

About our Law Tips blogger:
Nancy Hurley, Law Tips blogger, has long-standing connections with Indiana lawyers. She was formerly a member of the ISBA and IBF staffs for over 30 years. Nancy’s latest lifestyle venture is with ICLEF. We plan to utilize her exceptional writing and interviewing skills while exploring how her Indiana-lawyer background fits with ICLEF’s needs. When she isn’t ferreting out new topics for Law Tips, her work can be found in our Speaker Spotlight blogs, postings on the ICLEF Facebook page, Twittering and other places her legal experience lends itself.

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