By: Susan VanEpps
Having dedicated 30 years to Loudoun and Fairfax counties, Clarke-Hook President Ed Zigo is well known for both his commercial real estate expertise and his dedication to the community. Find out what he advises small to medium-sized businesses looking for commercial space.
What’s the role of Clarke-Hook in the Loudoun commercial real estate market?
We’ve changed our portfolio over the last 15 years to really focus on the eastern Loudoun and western Fairfax region, where we provide a full line of services. We buy the land, develop the sites, own and lease the buildings and manage the properties for the long term. And now, if a business can’t find the right space in our buildings, we can also proactively step in and act as their agent to help them find it somewhere else.
What are the signs a business is really ready to take that big step into a professional commercial lease?
The most important thing to see is the business plan – not one you download off the Internet and fill in the blanks. I sit down with businesses and you can just tell which ones have well thought-out plans that not only have a great business strategy, but steps on how to execute it. Business acumen is a key element. I meet lots of people who tell me their passion, but have never actually run a business. It’s just as important to have that tactical business planning for making it all work.
I also want to see that a business understands why a commercial property will work for them. We talk through all the issues to figure out what it is they really need. Sometimes a business perceives its needs different than the reality. If you are a destination business, for example, maybe visibility isn’t as critical as you think.
And money is a given. Small to medium-sized companies should have a business that generates the funds to pay all of their fixed expenses. They should also have a minimum of one year’s rent in their accounts – I call it “so you can sleep at night money.” If a business comes in with no financial plan, or with numbers that don’t match their plan, it’s hard to tell them they aren’t ready to do their dream. But we are conservative, and we don’t want to make deals that could hurt the tenant more than it hurts us.
Securing space is a big commitment; how can growing businesses avoid making a mistake?
Make sure the broker guides you through all the issues upfront. You want the honeymoon of your lease to be great, but the marriage to be even better! We create terms that help a business mature over time according to their plan. Businesses should have confidence in their plans to know that when they open their doors, they will have the activity they need.
And go in expecting to be treated like a business. When you sign a bilateral lease agreement, you commit to the terms of that lease regardless of what happens. Your business plan has to account for peaks and valleys in the economy or anything else.
Finally, don’t count on initial free rent to make your business work.Structure your deal so it makes sense for the length of the term. A few years ago you heard about deals for six months or a year’s free rent. Well, those days are over, except for the very largest companies. Sure, you might get free start-up time at the beginning of your lease, but it goes away real quick. And don’t sign a one-year lease! By the time you’re up and running, your lease is almost over.