An early decision in forming one’s business plan is whether to lease a place of business or to purchase. If a prime central location in an expense community is desired, then the cost and/or availability of properties for sale may be prohibitive. I have sold commercial property in downtown Danville at as high as $670/ s.f. In Danville, the retail rental rates are now at $4 per square foot in some places. It is necessary for the prospective tenant to calculate how much sales volume per square foot will have to be generated to cover costs.

Types of Lease - A business owner must look beyond the base rental rate to determine what additional costs might be added to her monthly outflow. If the lease is a true Net Lease, then the Landlord is entitled to pass through all costs of maintaining and operating the property to the tenants, including a proportionate share of the real property taxes. Retail leases tend to be Net leases, while office leases tend to be Fully Serviced, but many leases today are hybrids of the two.

Business owners must consider whether their business is a “destination” type of activity which people will seek, or whether it is important to be highly visible or in proximity to freeways, or to other businesses or resources.