Conducting a Search for a Site

If you have put in the time and effort — and possibly the pain — of identifying your business's operating steps, and have used this information to determine your facility needs, you may be more than ready to hit the road to find your facility. But, before you do this, a few words about the method of your search.

Start by choosing the general area in which you want to locate. Many a small business owner picks out a business facility this way:


While driving in his car through an unfamiliar neighborhood, Bill Horseman sees a vacant building that looks like a perfect site for his planned polo supply store. When he later gets to inspect the interior of the shop, it is even more than he hoped for, down to elegant equestrian carvings in the woodwork. Because he is so enthralled with the building's architecture and interior appointments, Bill has overlooked the importance of several factors. First, the property is in a neighborhood that has been in decline for the last couple of decades, with surrounding buildings in disrepair. Second, parking and access to main streets is cramped. Finally, the polo players of Creme d' Crop Hills — the store's target market — are over 40 miles away.

So, OK, this is an extreme example of how not to pick out a business facility. But it is offered to illustrate that the best way to pick out a business property usually is to go from the general to the specific. That is, look for appropriate communities and neighborhoods first. Once you have settled on a few that would meet you needs, then start looking at particular buildings. This method won't guarantee a successful selection, but it will improve your odds.

Real estate agents. If you know the areas where you are looking like the back of your hand, know how to ferret out commercial properties for sale, can invest a good bit of time in the search, and are knowledgeable about local commercial real estate practices, you may be able to locate an acceptable property by yourself, or with the help of real estate agents representing sellers. If all of this doesn't describe you, you may want to employ your own real estate agent (that is, a "buyer's agent").

A few words about commercial real estate agents, and how their listing and commission practices differ from those of residential real estate agents. In most areas of the country, the common practice observed in residential sales is that the seller pays all of the real estate commissions (which are typically 6 percent to 7 percent of the sales price) at closing. If the buyer is also represented by his own agent, this buyer's agent and the seller's agent split the commission due on the sale.

With sales of commercial properties, how the real estate agents get paid is less rigid. Often their payment is the subject of negotiations between the buyer and the seller, with the buyer sometimes paying at least part of the commissions. The total percentage of sales price paid out as commissions may be larger for commercial properties than that customarily charged on residential sales. Another difference is that a smaller portion of commercial properties offered for sale through real estate offices are listed as a part of a multiple listing service. This means that if you don't have a buyer's agent working for you, you'll probably have to contact a large group of sellers' agents to get a good idea of available properties.

From the viewpoint of one who is going to buy or lease commercial property, two things can be said: because finding an acceptable piece of commercial property tends to be more difficult than finding a residential property, your need for a buyer's agent is usually greater for commercial properties. Second, as the buyer or renter of commercial property, you may well have to pay at least a portion of your agent's fees.

Time can save money. If you can avoid it, don't start your facility search so late that you feel rushed to make a decision. Unless you take the time to see and evaluate several properties, you run a higher risk of making a costly mistake. Once you have tentatively decided on a property, revisit it a few more times; at different times of the day, if possible. You'll never know what you may find out.


John wants to buy a property for use as an open air café. He finds what he thinks to be the right property. Although he has visited the property several times during daytime hours, he never came by during the evening hours. After buying the property, he found out that the wind direction often changed as the sun went down. Unfortunately, this meant that jet airliners flying into and out of a local airport were routed onto different runways, with the result that they frequently "buzzed" John's café as patrons were sitting down for a "relaxing" dinner.