Tuesday, May 12, 2015

How To Avoid SURPRISES At Your New Commercial Real Estate Space

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net.

Picture this:

You just went through the entire relocation process for you new commercial real estate space and did everything you were supposed to do.

Start the process one year in advance of your lease expiration?  Check.

Do your market research?  Check.

Tour several different spaces within your target market?  Check.

Submit offers on a couple of your top choices?  Check.

Once you got the best possible deal for pricing and lease term, you negotiated your lease agreement.  At last, you just moved into your new space.

Fast forward one month. 

It just rained every single day for one straight week.  You operate a retail business in a strip center, and the parking lot is flooded.  People do not want to use half the parking lot because it is under a couple inches of water.  Frustrated by this inconvenience, several of your customers never enter your store.

You may not have any rights under your lease agreement either.  While parking in 2 inches of water is certainly an inconvenience that might drive customers away (no pun intended), it does not prohibit someone from parking and entering your store. 

Sounds like a bad situation, right?

What can be even more frustrating is that you could have avoided this by performing some unconventional due diligence.  And no, we are not suggesting that you analyze engineering plans or site elevations to determine whether the parking lot is going to flood.

All you needed to do to avoid flooding fiasco would have been to drive by your new commercial real estate space several times

Drive to the space and surrounding area in the morning during rush hour.  Go there during people’s lunch breaks.  Check it out during the evening when everyone is on the way home.  And make sure you go during inclement weather.

All tenants should drive by their future space – not just those involved in retail.

Flooding can be just as big of a deal for office and industrial tenants as well.  Employees, just like customers, do not want to walk through giant puddles to get into their space.  Shoes/clothes get ruined, it makes the floor slippery which is a slip hazard and liability, trucks may be prevented from making deliveries/pickups, etc.

And flooding is just one example of a problem that could arise if you only visit your commercial real estate once or twice before signing a lease.  Other problems include traffic congestion, noise levels, smog (in certain areas), neighboring tenants taking up lots of parking at certain times of the day, the list literally goes on and on.

Also, mix it up on the actual days that you visit.  Make sure you do not always go on a Wednesday, for example.  Here’s why:

We heard a story of a tenant in a downtown retail shopping area in a small town.  During the warm weather months (and this was in Florida so pretty much every month except December, January and February), there was a farmer’s market from 3:00-5:00.

People were not allowed to park on the street because it was sectioned off for people walking around the farmer’s market.  Customers would have to park in a garage several blocks away in order to visit the store.

Guess what?

Fridays afternoons were never busy.

And Friday was an important day for this tenant and losing out on this business was devastating.

Unfortunately, there was nothing they could do about it.

Again, this situation could have been avoided had the tenant driven around the potential space several times before signing a lease (especially on a Friday if that was a key day for their business).

A quick ride to your future space will paint a picture of what you can expect at any time of the day and from any situation. 

What do you have to lose? 

Worst case – you just confirmed that you selected a great space with no surprise issues. 

Best case – you discovered a “hidden issue” with your new space.  You can now either use this as leverage in your negotiations or find a new location.


There are several items of due diligence you should perform before signing a lease agreement for your new office space or warehouse space.  Most of the time, you can perform the due diligence from the comfort of your own desk.  You can make phone calls, read reports, negotiate a lease, etc.  However, some items require you to get in your car and drive by your space.

You might be asking yourself, how likely is it that my location will flood?  And if it does flood, what is the big deal if it is only once a year? 

Trust us, that one day that it floods will be the worst possible day it could have been. 

It will always fall on a day that you had your annual sale, meeting with a big client, when you were in a huge hurry, etc.

We sincerely hope you are enjoying our blog posts.  We welcome any and all questions and comments.  If you are looking for commercial real estate space in southern Mississippi, please give us a call at (228) 575-7731, email us at leasing@seawaybusinesspark.com or visit our website at www.seawaybusinesspark.com.