Leasing or buying space for your business in New Jersey

Zoning and site plan approval come first

New Jersey's Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.) gives each municipality the power to zone. The planning board approves site plan, subdivision and conditional use applications. The zoning board of adjustment hears appeals from the zoning officer and decides use variances, such as for a use that is not permitted in the zone.

The New Jersey Business Action Center suggests meeting with the local zoning officer to confirm your business will conform with current zoning, whether variances are needed, and whether the site meets parking requirements. Here's what that means for you: confirm the use before you sign, not after.

Municipal certificates for a new tenant or owner

Towns usually require approval before a new business opens in an existing space. In Cherry Hill, for example, a Certificate of Continued Occupancy is required for either a change of tenant or property owner, and it is issued after a township inspector confirms the site meets the requirements for the business. A full Certificate of Occupancy is required when the use of the building changes to a higher use and occupancy classification or when construction work must be completed. These certificates are not issued until zoning approval is in place.

Each town runs its own process, so ask the municipal zoning and construction offices what your business will need and how long it takes.

Understand the lease structure

Commercial leases differ in which costs you pay on top of base rent. In a net lease, the tenant pays base rent plus some or all of the property's operating and maintenance expenses. In a triple net (NNN) lease, that usually means property taxes, insurance and common area maintenance (CAM) charges. Under a gross lease, the landlord pays those expenses and the tenant pays a single, all-inclusive rent.

I want you to understand what you're agreeing to. Compare spaces by your total occupancy cost, and have a New Jersey attorney review the lease before you sign.

Environmental due diligence

A property's past use can affect what you inherit. Under federal law, All Appropriate Inquiries is the process of evaluating a property's environmental conditions, and it supports certain liability protections for buyers. A Phase I Environmental Site Assessment done to the ASTM E1527-21 standard is consistent with EPA's rule.

In New Jersey, the Industrial Site Recovery Act (ISRA, N.J.S.A. 13:1K-6 et seq.) can be triggered when an industrial establishment changes ownership or operations, including some sales of the real property where it operates. Whether a business is an industrial establishment depends on its NAICS code and its handling of hazardous substances. NJDEP also keeps a Known Contaminated Sites List, which you can search through its DataMiner reports by county. The New Jersey Business Action Center also points business owners to state resources, and the New Jersey Economic Development Authority (NJEDA) runs programs for small businesses, such as the Main Street Acquisition Support Grant. Ask your attorney and an environmental professional which reviews your deal needs.

How Cathy works with business owners

Cathy Walters has been a licensed New Jersey real estate professional since 2007. Her commercial work covers sales, leasing, and coordinating property searches around a business's space and operational needs, in Burlington, Camden, Gloucester, Salem, Cumberland and Mercer counties.

She works with a network that includes real estate attorneys, contractors, insurance professionals, CPAs, inspectors, appraisers and surveyors, so questions about business insurance, improvements and due diligence reach the right person. Her eye for design helps you see how a space could be laid out for your operation. Let's walk through your options.

Before you lease or buy commercial space: what to check

• Meet with the zoning officer to confirm your use is permitted and whether variances are needed.
• Ask whether a site plan approval is required for your plans.
• Find out what certificate the town requires for a new tenant or owner, and how long it takes.
• Confirm the lease type and which costs pass through to you on top of base rent.
• Check NJDEP's Known Contaminated Sites List for the property and nearby sites.
• Ask an environmental professional and your attorney whether a Phase I or an ISRA review is needed.
• Contact the utility providers if your business will use a lot of water, gas or electric.