Finding just the right spot for your new business – whether it’s a store, an office or a shop - can be a daunting challenge. The technicalities of tax codes and other regulations, as well as the characteristics and quirks of local real estate markets, can seem like a maze.
Here are some tips to help guide you through the process:
First, sniff out tax breaks or other incentives
There are plenty of cities and states that will greet you with open arms, tasty tax breaks and other incentives - if you choose a location on their redevelopment agenda. Many of them are trying to attract new business to revitalize their downtowns, commercial and mixed-use neighborhoods. Start with a search of their websites for such opportunities and the relevant contact information for the appropriate government officials. Be sure to determine whether the tax breaks and incentives require you to hire only local, resident workers. Then broaden your search. You’ll find the phrase “research tax incentives for commercial real estate” produces more than 6 million places to start.
Now, go another step further in your online research
There are many central, informative and timely sources of information on national and regional real estate markets and their particulars that can be found with a little online searching.
Among the virtually unlimited choices are: Black’s Guide, which offers free access to timely information on a claimed 80,000 properties and 30,000 real estate pros in major markets nationwide; and GlobeSt.com, whose stated mission is to provide “in-depth and breaking commercial real estate news around the clock in major and secondary markets throughout the country.” They are by far not the only such info resources on the internet.
Find a broker who’ll be a “champion” for your needs
Interview several brokers before you choose one. Be certain they understand your type of business and what you need out of the real estate process. A good one will steer you to the right location at an affordable price.
“You want to identify a champion, which is not necessarily a quick process,” says Camille Hoheb, director of real estate for Medspa Development, a skin-rejuvenation provider based in Irvine, Calif.
…but never take their word for it
You, personally, must become an expert on the tax opportunities, codes, ordinances and other specifics for your prospective area. Most cities and municipalities have websites where you can find basic information.
Then talk with city officials in zoning, licensing and inspections, and others with locally specific expertise. You don’t want to find out after the contract is signed and the first payment made that, despite your research and your broker’s assurances, your choice location is restricted from certain essentials of your business, or that tax breaks and incentives are tied to provisions you missed (see local hiring requirements above). Sandy Shaud, executive producer of RealEstateInvestmentTV.com, in southern California, says bluntly: “Never take the Realtor’s word or the owner’s word for it. Go right to the source.”
And before signing or paying for anything, compare the same information in competing locations: You may well find that the tax breaks are better, and the taxman’s due smaller, in a neighboring city or township.
So now you’re ready to make your big move?
Slow down. You may find very quickly that you have to work with a city council or township board to get approval. Going to town meetings can be helpful groundwork. That’s getting down to often tedious research, much of which will do you no good, but you’ll probably get the flavor of what existing businesses, and other startups, have to confront in doing commerce there.
Once again, talk to people who already are, or have been where you’re going. You’ll be able to draw on their experience and, armed with the information you’ve gathered from zoning and other departmental officials who will affect your operations, you should be pretty well-armed to go before the board, answer its questions and address any concerns.
But if you’re not absolutely certain where you stand, it’s well worth paying a local attorney to draft a simple letter explaining your intentions and why you qualify for the tax breaks or other incentives you seek, or to appear with you to do most of the talking before the board.
Our Bottom Line
You need to learn everything you can get your hands on potential tax breaks for your chosen business site before you make that investment. Combine a relationship with a knowledgeable broker, the results of your own legwork in thoroughly questioning both appropriate officials and local business owners, and online research, to make yourself an expert on the subject. You can’t afford not to.
Kaitlyn Buss is a freelance writer for StartupNation.