Questions to Ask When Viewing a Commercial Property
Questions to ask the agent or landlord while walking a retail unit, office suite, or warehouse, covering zoning and permitted use, the difference between rent and total occupancy cost, building systems and their age, who repairs what, and how you get out if the business changes.
20 questions, each with the reason to ask it · includes a conversation guide
The questions
Open any question to see why it works.
- 1
Who owns the building, and would I be dealing with them or a management company?
The owner decides what gets approved and the manager decides how quickly anything happens. A single local owner and a fund holding two hundred buildings behave very differently when your roof leaks or you ask to change the layout.
- 2
Who was the last tenant here, and why did they leave?
The answers worth hearing are the specific ones: outgrew it, went under, could not make the parking work, could not get a permit. Vague answers about the business moving on usually mean the space has a problem the market already knows about.
- 3
How long has this unit been empty?
Long vacancy is your main source of negotiating leverage and also a warning. Ask what other offers were made and refused, because that tells you where the landlord's real floor is far better than the asking rent does.
- 4
What is the zoning, and is what I want to do here permitted outright?
Permitted outright is different from allowed with a special permit, which can take months and can be refused after you have signed. Ask for the zoning designation itself so you can check it rather than relying on the agent's summary.
- 5
What is the rentable area versus the space I can actually use?
Commercial rent is often charged on rentable area, which includes a share of lobbies, corridors and shared restrooms. The load factor can add ten to twenty percent, so two quotes at the same rate per square foot may not be the same deal.
- 6
What do I pay on top of base rent, and how is it calculated?
Common area maintenance, property taxes and building insurance are frequently passed through to the tenant. Ask for the current per square foot figure in writing, because the advertised rent alone tells you very little about the monthly cost.
- 7
How have those pass-through charges moved over the last three years?
The trend matters more than the current number. A history of steep increases, or a recent tax reassessment, means your total cost rises regardless of what your rent says, and you can ask for a cap on annual increases.
- 8
What term are you offering, and what renewal options come with it?
A renewal option holds the space for you at a defined mechanism for setting rent. Without one you can build a business here and be told at year five that the space is going to whoever pays more.
- 9
Is there an annual rent escalation, and is it fixed or tied to an index?
A fixed percentage lets you forecast. An index-linked increase moves with inflation and has no ceiling unless you negotiate one. Over a ten year term the difference between the two can be very large.
- 10
Who is responsible for the roof, the structure, the parking lot and the systems?
This is the whole argument in commercial leasing. In many lease forms these become the tenant's cost, either directly or through pass-throughs, and a roof or parking lot replacement landing on you can dwarf a year of rent.
- 11
How old is the heating and cooling equipment, and when was it last serviced?
Ask to see the units and the service records, not just to be told. If you are responsible for maintenance and repair, equipment near the end of its life is a bill you are inheriting on a schedule you cannot control.
- 12
What electrical service comes into this unit?
Ask for amps and whether the supply is single or three phase. Upgrading service is expensive, slow, and sometimes limited by what the utility can bring to the building, which quietly rules out kitchens, workshops and some equipment.
- 13
What is the clear ceiling height, the floor loading, and how do goods get in?
For warehouse and workshop space these decide whether the building works at all. Measure to the lowest obstruction rather than the deck, and check the turning space outside for the size of vehicle that will actually deliver to you.
- 14
What condition is the space delivered in, and is there an allowance for fit-out?
As is and turnkey are opposite ends of a large sum of money. If an improvement allowance is offered, ask who manages the work, who owns it at the end of the term, and whether you have to remove it when you leave.
- 15
What signage am I allowed, and who has to approve it?
Retail businesses often find that the landlord's sign criteria and the local sign ordinance both apply, and that the good position on the pylon is already taken. Look at the existing signs and ask which of them are grandfathered.
- 16
How much parking is dedicated to this unit, and how is it shared?
Ask for the count and for the rules, then visit at the busiest hour of the week rather than at the time of the viewing. Shared lots that work at eleven in the morning can be unusable when the neighboring tenant is trading.
- 17
Do any other tenants have exclusive rights or use restrictions that affect me?
In multi-tenant retail, one tenant may hold an exclusive on a product category that overlaps yours, which can restrict what you sell. These clauses live in other people's leases and only surface if you ask directly.
- 18
Has there been an environmental assessment, and what was on this site before?
Relevant for anything industrial, and for buildings that housed dry cleaners, garages, or fuel storage. Ask plainly what reports exist. Contamination questions are ones to put to a specialist consultant and your lawyer, not to settle at a viewing.
- 19
What are the access hours, and what building services stop outside them?
Office buildings routinely shut down air conditioning and reduce security outside standard hours, with after-hours use billed separately. If your business runs early, late, or at weekends, get the charge and the notice period in writing.
- 20
If my business changes, can I sublet or assign the lease, and what would ending it early cost?
The exit is the clause tenants regret most and negotiate least. Ask whether consent for a sublet can be refused, whether you stay liable afterwards, and whether any break option exists. These points belong in front of a commercial property lawyer before you sign.
Walking a commercial space
Practical guidance for the conversation itself.
What to do at the viewing
What to do at the viewing
- 1Walk the whole building, not only your unit. Look at the roof if you can get up there, the electrical room, the loading area, and the restrooms shared with other tenants.
- 2Go back at a different time of day and stand outside for twenty minutes. Traffic, parking, deliveries and foot flow change completely between ten in the morning and five in the evening.
- 3Photograph the mechanical equipment plates, the electrical panel, and any damage. These photos are useful later when you are comparing spaces or negotiating a condition report.
- 4Measure the parts that constrain you: door widths, ceiling height at the lowest point, the turning space for a delivery vehicle.
- 5Talk to a neighboring tenant if one is open. Five minutes with someone who already pays this landlord is worth an hour with the agent.
The numbers that are not the rent
The numbers that are not the rent
- Ask for the total occupancy cost per square foot: base rent plus every pass-through charge, quoted on the same area basis.
- Get the last two years of actual operating expense statements rather than the estimate. Estimates are optimistic and reconciled against you later.
- Price the fit-out with a contractor before you commit, and assume permits add weeks that you are paying rent through unless you negotiate a rent-free period.
- Find out the utility costs from the previous tenant's bills if you can. An old building with single glazing and aging equipment can cost more to run than the rent difference you negotiated.
- Check what security deposit or personal guarantee is expected. For a new business, a personal guarantee is often the largest thing in the deal and it is negotiable in length.
- Ask whether property taxes have recently been reassessed, or will be after a sale, and who absorbs the increase.
Warning signs on the tour
Warning signs on the tour
- The agent cannot say what the pass-through charges ran last year, or offers only an estimate.
- Several units in the building are empty and have been for a while.
- Water staining on ceiling tiles, fresh paint in one patch of wall, or a sealed-off area you are told not to worry about.
- You are told the permit for your use will be fine, but nobody will confirm it with the local planning office before signing.
- Pressure to sign a letter of intent at the viewing, particularly one with terms you have not had a lawyer read.
- The landlord will not say who is responsible for the roof and the parking lot in plain language.