Check out our newest video presentation of the 3 biggest mistakes tenants make when looking for office space.

Find Office Space

When you are considering leasing an office warehouse space or any space for that matter, you want to go in to it with eyes wide open.  The following will help you understand what to consider and hopefully help make your experience with leasing space a better one!

 Students of history recall the stories of the landlord abuse that occurred in the late 1800’s/early 1900’s when tenant farming, mining towns and tenant exploitation were common.  Fortunately, these situations have been largely extinguished in the US, but adversarial feelings between landlord and tenant remain.  Is landlord abuse prevalent today when leasing space? Are they truly ogres? Or does the modern media sensationalize a few occurrences to feed this perception?

 In our experience, most landlords are reasonable and fair. However, since they know the tools of the trade, often they get the upper hand in the lease agreement and structure contracts to their advantage.  Many tenants, surprised by requirements of their lease after they move in, develop an “us vs. them” attitude.

 Tenants can level the playing field by taking a few minutes to unravel the “legalese” of the lease agreement before signing.  Often a 20+ page document, however, makes this a daunting task– unless you know what to look for.  Here are 4 costs that some landlords quietly shift to tenants and what tenants can do to protect themselves:

1. NNN Expenses: Check the lease for the term “base rent.” If you find it, the lease you are about to sign is a “triple-net lease” or NNN Lease.  This type of lease requires the tenant to pay for all of the expenses to run the property (such as property tax, insurance, exterior painting, etc.). If any of these expenses increase, it’s the tenant that pays more, not the landlord.  If the building is painted or the asphalt is replaced, once again, the tenant pays the bill. And the worst part? The tenant doesn’t get to vote.  It’s not a HOA. 
   
   Tenant Protection: Sign a “gross lease” vs. a NNN lease.  Gross leases require the landlord to pay the property operating expenses.  If a gross lease is not available, negotiate limits to NNN expenses into your lease agreement.
     
2. Interior Maintenance Costs: [Skip this section if your lease says “Full Service Lease.” Full Service Leases are typical of office buildings.]  Most leases require tenants to maintain everything inside of their space at their own cost. Maintenance can include bath fixtures, light fixtures, carpet, drywall, etc.
   
   Tenant Protection: The easiest way to avoid these costs is to lease space at newer properties.  Prior to move-in, request a walk-through with the property manager to document any defects in writing and with photos.
   
   
3. Utility Costs: Responsibility for utility costs varies from landlord to landlord. Ask questions to determine who pays for what. The cost for electricity/garbage/water may be included in the rent at one property but not at another.
   
   Tenant Protection: A good understanding of the utility costs is required to get a true “apples to apples” comparison of the cost to lease different spaces.  It also prevents an unwelcome surprise after you move in.  No one wants an unexpected $300/mo. utility bill!
   
   
4. HVAC Costs: Heating and cooling systems are big ticket items. Once again, treatment of HVAC costs varies. Find out who is responsible for maintenance and major repairs/replacements. Maintenance may be only a few hundred dollars per year, but a replacement can cost over $5,000.
   
   Tenant Protection: Negotiate a limit on contributions to HVAC repairs - $500 per year for example.  Check replacement language – it isn’t uncommon for tenants to receive a $3,000 bill for a replacing a 15 year old system when they’ve only occupied the space for two years.

 Again, most landlords are fair.  If you are billed for an unexpected expense, contact your landlord.  Compromise may be possible.  Often, they aren’t the ogres they are reported to be.

Guest Post by: Barry Raber
Check out our website for more tips, resources and other cool stuff, http://OfficeWarehouseSpace.net

A recent study by the Massimo Group of hundreds of commercial real estate brokers in numerous companies indicate that the brokers are expecting a slow recovery over the next 12 months.

Click here or on Image to see larger image

Play Full Video Presentaion

Find Office Space

According to a recent report by the National Association of Realtors, the US commercial real estate markets stabilizing with more demand and growing employment numbers. According th the NAR forecast office vacancy rates are expected to drop slowly over the next few years. The national office vacancy rate is expect to fall from 16.1% now to 15.3% by the end of 2012. This is based upon their economist's forecast of job growth of 1.5 million and 2 million jobs in 2011 and 2012.

If the NAR is correct and job growth continues at this pace beyond their predicted time period ending 2012, it would be 2018 or 2019 before the Office Vacancy rate drops to a more normal 10% level. This is assuming developers don't decide to provide any significant amount of new office space.

It also means that there are great opportunities in the market place for office tenants looking for office space. With the help of an experience local representative, a great deal can be had on office space of all types.

Get Help Finding Office Space

National Office Update & Office Tenant/ User Strategies PodCast
Original Air Date:    4/2/11

Very informative broadcast about the office market and office space strategies for office space tenants.

"The office user show provides a national office market update and best practices for corporate office users. Chris Macke, Senior Real Estate Strategist with CoStar Group provides an update on national office market performance including top cities for investment and markets prime economically for corporate headquarters. He also shares market advice for office users and expectations for 2011 and 2012.

Show host Michael Bull and industry leading guests cover current topics important for office users including strategic lease provisions for tenants, protecting lease rights before foreclosure, prevalent lease situations in this economy and the guests share best practices when renewing leases and securing new locations.

If your company uses office space or you advise companies that do, you will find this show very informative and enlightening."

Listen Now

Find Office Space