Mar 17, 2015 Blogs Office Space

Financial Considerations While Evaluating Commercial Space for Rent

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While evaluating commercial space for rent, you need four angles of evaluation. If your business has been having a good run, and you need to expand, searching for sufficient office space to balance your growth must be one of your first priorities. Evaluation of commercial space for rent is a unique process because every real estate transaction is exclusive, and requires a proper appraisal to arrive at an attractive rent structure with favorable terms. Keeping in mind the prospective success of the business, you would do well in making an allowance for some of the main financial considerations in taking an office space for rent in Bangalore.


Where people’s contact is a primary trigger of the business, location can make a very serious impact on the success of your business. Stick to your projected financial plan and make sure that the rent is affordable for your business. However, if you are in a business where the location is irrelevant, like that of a plumber, sacrifice location for affordability, and pass on the savings to your customers and earn their goodwill and more business. Some of the other factors that merit contemplation are:

  •  Whether the location would entail a premium on the rent
  •  Whether the service charges, utility bills, maintenance and repair bills are reasonable
  •  Whether the security deposit is in line within the general norms of three or six months
  •  Whether the stamp duty payable on rental agreements conforms to the norms
  •  Whether the business rates (Tax on commercial property) follow the norms

Financial Considerations Related to Location

Everything financial related to a location, hinges on the following important factors.

Do customers travel to the business or do employees travel to the customer

This depends on the type of business you are in, as customers respond to diverse businesses in different ways. Then again, there is this distinction between pedestrian foot traffic and automobile traffic. For example, If you are running a contemporary coffee shop, a street with a perennial rush of foot pedestrians will rain benefits on you, while if it is an automobile workshop that you run, your choice location would a busy street offering drivers the convenience of pulling in when they want. If you are in the service business, the location is not as important as you would be travelling to the site for repairs. A men’s store can expect more business if it is adjacent to other shops if its kind. For a mail order business, location is not very important.

Is Convenience a Key Factor?

There is no doubt that convenience, which is a factor of effort and time, plays a major role in the success of your business. Location, accessibility, parking and payment terms and sometimes, working hours are factors that assist ease of doing business.

Proximity to Customers

Depending on the business at hand, a proper location that allows for easy interaction between the vendor and the customer synchronizes sales, marketing, technical support and customer service leading to rich dividends to both parties.  Retail businesses, for example, will prosper if they are located in a busy neighborhood of similar shops with shoppers helping to meet the vendor’s target sales.  The advantage of proximity to larger stores with bigger sales will also positively rub off on them.

Employing a Rental Broker

Contrary to the general perception, employing a lease rental broker will certainly work out cheaper for you because

  1. A) These people are professionals and have wide contacts
  2. B) They know the area well and can easily direct you to ideal commercial space for rent without waste of time
  3. C) They can arrange property visits at your convenience, not necessarily only working hours
  4. D) They can give you the exact floor space and rental calculations
  5. E) Their commission is paid by the property owner.  You do not pay them anything
  6. F) All this saves you a lot of money and time

Other Considerations

  •  Proper transportation to the location, utilities available, local taxes, zones and several other critical factors have a bearing on your choice of a location.
  •  The flow of traffic, proximity to other similar or different businesses, parking convenience and space requirements, including for your future exploration plans must be part of your deliberations in selecting a location.
    •  Most importantly, for Commercial space in Bangalore a thorough study of the terms of the lease and its mode of calculation is very important factors.  Also make sure that your rent includes the cost of space and advertising.

    The Insurance Factor

    Insurance is an important part of the lease rental. The lease agreement will decide on who will pay the liability and fire insurance premiums. In the case of a gross or a full service lease, the landlord takes the entire burden of insurance. However, in triple net leases the tenant shares the expense, and for leases that fall between these two categories, the terms are mutually negotiated.

    Now, that you have the right metrics to evaluate a commercial space for rent, share with us the things that you consider. You may also tweet your thoughts @ikevaindia.


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