BusinessTN

It was looking to be a hot summer for Dave Barger and his Memphis-based Web development company, LunaWeb. With a catastrophic air conditioning failure in a low occupancy building that housed his company, employees waited patiently for the building owner to raise enough cash for repairs. The owner operated out of California, making communication difficult, and when a friend revealed that the building was going up for auction in three weeks, Barger knew there was no time to waste. He had to get out, and quickly. Fortunately, he soon discovered that the real estate market was on his side.

Whether moving to a location with more space for a growing business, finding a cheaper spot after downsizing, or just looking for something more convenient for employees and customers, the bursting of real estate bubbles can provide small businesses with surprising opportunities. According to Robert Staub, founder of the Memphis Small Business Chamber and host of the Internet/radio program, The Small Biz Show, commercial real estate is currently a consumer's market.

"There's plenty of space available for small businesses, which gives them a lot of leverage," Staub says.

For example, while it's always a good idea to review lease agreements with an attorney or tenant representative, real estate doldrums are an especially good time for small business owners to take another look at existing agreements for possible money-saving amendments.

"People aren't used to saying, "I want to make an amendment to your lease," Barger explains, but not doing so at a time like this can be a serious oversight.

Keep in mind, though, that even with property owners eager to fill space, they're still looking for tenants with staying power--businesses that can succeed even in a crisis. Expect to provide financial statements and to have a credit check run on the business, says Ryan Allen, property manager with Pointe Property Group in Chattanooga. A particularly successful small business can turn this requirement into yet another opportunity to capitalize on the current economy. Great credit, Allen points out, can lead to more incentives, such as waiving the security deposit (typically two months of rent for Pointe Property).

Fortunately, incentives are plentiful in this market. They include rental abatements and tenant improvement plans, which Allen explains are extra finishing options and amenities that can be added to the building just before a business moves in. An often-overlooked aspect of lease options and improvement, according to Allen, is the potential for growth. "A small business owner may find something that's the right fit for right now, but that doesn't account for the space and accommodations that will be needed a few years down the road."

Future growth isn't the only reason to look ahead in regard to one's lease agreement. As a current lease is starting to wind down, start looking for better options, even if you don't plan to move.

"The best time to move is at the end of a lease," says Larry Rossini, director of the Tennessee Small Business Development Center in Knoxville. "However, this is the best time to negotiate a better lease."

With so much space available at more competitive rates than five years ago, businesses may benefit from renegotiating in their current space. "Landlords understand how difficult it is to lease space, and they are working with our clients to keep them," Rossini says. "In more than one case, landlords let the owner go for a few months with no lease payments then interest only to keep them in the space. The amount owed was tacked onto the end of the lease."

Cutting costs during the slump may be just what a small business needs, and a good landowner willing to defer payments can guarantee the tenant will still be around when things pick up.

Being forced to move out became a blessing in disguise for LunaWeb, which found a new space in a better part of town with better amenities within three weeks.

"It's as simple as asking around among the other tenants to gauge satisfaction," Barger says, explaining that the best places can be found through the people you know.

Talk to suppliers, business partners, anyone you have a strong working relationship with. Look for the ideal location with a landlord with strong business ethics, Barger advises. Now is a good time to find more breathing room without emptying your wallet.