When leasing commercial office space to house your organization, it is rare to find a space that is exactly perfect for your needs. Often alterations, called office tenant improvements, need to be made to the facility. This requires negotiation between you, your office tenant representative you selected to help you get the best possible lease, and the landlord.

It is important that tenant improvements never be agreed upon using a handshake arrangement. The improvements involve costs and legalities, therefore a tenant improvement workletter is developed defining the agreement. The workletter is a legal document created for your protection and some very important concerns should be precisely covered in the agreement.

Questions and Issues Important for Inclusion in the Workletter

·         Is the landlord or the tenant responsible for doing the work to the office space?

·         Which party chooses the contractor and space planner and how exactly will these parties be selected?

·         Who pays for what expenses involved in altering the commercial office space being leased?

·         Is the space involved in the alternations usable or rentable square footage and how many square feet are involved?

·         What relationship does the rent commencement date have to the tenant improvements and construction?

·         What if there are delays caused by the tenant? What if delays are caused by the landlord?

Types of Workletters

Turn-Key: This type of workletter is established before lease signing and the landlord agrees to pay the improvement costs per approved plans. Usually the improvements are completed before the tenant occupies the office space.

Landlord Workletter: In this situation the renter is given an allowance by the landlord to make changes. If there are costs overruns, the tenant is responsible. Typically the lease is signed before this type of workletter is put into effect. The landlord maintains some control over the improvements ensuring they meet approved plans.

Tenant Workletter: This type of workletter may or may not provide an allowance from the landlord. Basically the tenant controls the improvements and accepts the cost risk. If an allowance is negotiated, the tenant is responsible for all costs over the allowance.

Selecting the Best Workletter for Your Office Space

It is important to go over the benefits and risks of each type of workletter with your Office Finder tenant rep before determining which types of workletter is best for your specific situation. It all depends on the work you need, how you want to manage the work, and what terms the landlord will agree to. Your office tenant rep will help you negotiate the best possible deal for your tenant improvement workletter as well as your office space lease. 

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By: James Osgood

One of the most stressful parts of starting your own business is finding the perfect place for your office.  You spend hours searching only to find that one location has what you need, but it's too expensive.  Another location has a great price, but it's missing many of the things you consider necessities to run a professional and efficient business.  If you're looking for office space, it makes sense to hand over your search to a qualified professional who can find you the building or office you need at a price you can afford.

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When you outsource your office space search to OfficeFinder, you'll find a degree of professionalism you weren't expecting.  We have a vast network of experts who know how to find the property you need. They average over 12 years of experience. Using our services will give you the time you need to devote to things like hiring a qualified staff and making sure you have the right office equipment to keep your business strong.  

You're an expert in your field.  You're great at what you do.  Why not let us help you by offering the services of the professionals in our field to help your business find the right space? We are experts inour field! We'll work with you to get you the results you need.  

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By: James Osgood

When you lease commercial office space, the process included negotiating with the property owner to establish what will be contained in your lease.  Having a basic knowledge of the pitfalls to avoid and the opportunities to save money will make the task much less arduous for you.

While landlords are reticent to lower rental rates, stating that the property is valued high and has a high level of prestige and lender requirements must be met, there are other costs embedded in the lease that are open for negotiations. Include a well-qualified tenant representative in all phases of negotiations. In fact, the tenant rep may be the person who located the perfect property for you.

Once you’ve worked your way through the office space location process and located the office space that best fits our needs, your tenant rep will send the landlord a letter of intent. This is a non-binding statement that tells the landlord what space you want to rent and how much you want to pay. While other elements are included in this letter, they are all open to negotiation.  This letter may end up being revised several times after going back and forth with the landlord to reach an acceptable agreement.

Office Lease Term: The length of time you wish to lease the office space can be anywhere from one year to a decade or more. The basic lease probably states a specific office lease term, perhaps five years, but you can required that period be changed to suit your needs. If you are planning to do a lot of improvement to the property, you may want a long lease, whereas if you are a growing company, you may want a much shorter lease to allow you to readily move into larger office spaces if needed in a few years. Be sure the terms regarding lease renewal are also clearly stated.

Beginning Lease Date: Sometimes commercial office space requires major construction or tenant improvements before you move in and begin doing business from that location. Be sure that you don’t have to begin paying rent until you occupy the space.

Rental Incentives: Some commercial office spaces offer rental incentives such as one or more months rent free upon signing a lease of a specific duration. Even if no rental incentives are advertised in the office space listing, you may be able to negotiate some incentive by simply asking the landlord. If the building is completely occupied except the space you are considering leasing, then it is less likely that the landlord will give this concession, but if the building needs occupants, the landlord may be very flexible about offering incentives to establish you business in that location.

Offie Space Tenant Improvements: Another concession sometimes offered by a landlord to new tenants is an allowance to make changes to the office space layout. Your tenant rep will be a big help in negotiating changes to the office space. Perhaps you want interior upgrades, parking lot improvements, or other changes, you want to include these requests in your letter of intent and discuss them at length with the landlord. You may find that the landlord will pay for all improvements in order to get a long term lease established. The landlord might give you an allowance and ask that you bear part of the expense; this makes negotiating this area particularly sensitive because you want to get the improvements at little or no cost to you. If there are no improvements needed, use this fact to help negotiate a period of free rent instead.

Exclusivity Clause: Some types of businesses find it important to avoid having a competing business in the same area as their operation. You may negotiate with the landlord to guarantee that a business of the same type as yours will not be allowed to rent in the same building. If the landlord owns a large area of building near your office, you may even be able to establish that no competing business will be allowed to rent from the landlord in a specific radius. This often applies to businesses that sell specific services or provide retail products.

These are just a few ideas on areas in which negotiations are possible, but there can be a wide range that vary from market to market. Obtaining the services of a qualified Tenant Represenative, as OfficeFinder Members are, will ensure that you can take advantage of all possible negotiation opportunities. Remember, Tenant reps do this every day, while you do it a the most every few years. There is no cost to you to have one represent you. It is already built into the cost of the space whether you take advantage of it or not. Use our short form to request assistance to find a qualified tenant rep you can work with.

By: James Osgood

People often think office space leasing is not much different than renting a condo, apartment or house. Having leased residences in the past, the business owner may think that doing it alone is the way to go. This can be a huge mistake!

You are an expert on your business, but you don’t often deal with leasing office space. Probably no more often than every three to five years has your business grown to the point you have rented larger office space or have decided to go for a better location. Landlords are experts on leasing office space because they do it all the time. You need an expert in office space leasing on your side, too. Choose a well-qualified tenant representative to allow you an even playing field with negotiations.

Do not think that involving an office tenant representative in the office space leasing process will cost money and result in paying more rent. This is a complete misconception. In fact, the cost of services of a qualified tenant representative is normally included in the asking price whether you choose to use the services or not.

When negotiating an office space lease, an office space tenant rep will save you money and make certain you don’t make any costly mistakes. The confusing verbiage of the lease can easily be explained by the tenant rep of your choice. After all, the landlord most likely has a commercial broker listing agent to represent him or her. The landlord’s agent will try to ensure the landlord gets the best price for the property possible. Why shouldn’t you have a qualified tenant rep by your side as you enter into negotiations for an office space?

Even if you already occupy a great office space, when it comes time to renew the lease, your tenant rep can help you get the best renewal lease possible. If you are considering vacating you current office and moving into another location, a good tenant rep will help you locate the perfect space and help you negotiate the new lease.

Entering into negotiations with a tenant rep will save you money in several ways. The office space leasing process is quite complex and often confusing. The decisions you make will impact the price you pay each month for the space in which your business resides, resulting in an impact on your profits. The numbers and line items in the lease can be translated by the tenant rep into simple language you can understand, allowing you to make sound decisions during negotiations.

The knowledge and experience of the tenant rep allows him or her to have a grasp of current asking prices and lease incentives. With the guidance of an expert tenant rep, you have the subtle leverage you need when negotiating the lease and any changes you find necessary such as tenant improvements. Also, the tenant rep will make sure you have the documentation you need to protect yourself and your business during the duration of your lease.

Going it alone in the office space leasing process simply doesn’t make sense when there are qualified tenant representatives available to help you and it won't cost you to obtain their services. There are a few questions you need to ask when choosing the right tenant rep for your needs:. These include:

•    Can you commit the time necessary to work with me on negotiating the lease?
•    Do you primarily ask as a tenant advocate as opposed to a real estate listing agent?
•   Are there any potential conflicts of interest if we work together on this negotiation process?
•   What experience do you have in negotiating leases such as the one I am considering?
•   During the last 3 years, how many tenant representation transactions have you handled?
•   What is your philosophy on office space lease negotiations?
•   Do you enter into an Exclusive Representation Agreement when working with a tenant?
•   How will you be paid? What commission do you expect to earn?
•    What if I am not happy with your services?

If you want to lease the perfect office space and pay as little rent as possible while enjoying the maximum benefits and incentives, do not attempt to negotiate without a tenant rep’s involvement. The tenant rep’s job is to ensure your interests are protected and get you the best possible deal. It just makes good sense to have a local commercial broker who has an excellent reputation for helping get tenants the best possible lease benefits to assist you with the office space leasing process. Commercial property leases are simply not “Do It Yourself” projects; Office Finder services are readily available to provide the expert experience you need

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Top 3 biggest mistakes office tenants make (on SlideShare.net)

Business transactions require careful financial analysis and commercial office space leases are no different. Whether your organization is negotiating an office lease for its first facility, relocating into a larger office space, or negotiating a lease renewal for the same facility you’ve rented in the previous lease period, a complete evaluation of the costs should be to reveal exactly how beneficial the current negotiating position is to the future of the company as well as to compare options.

By this point in the commercial office property lease negotiation process, you should have already selected a real estate professional, a tenant rep, to assist you in obtaining the best possible office lease. Property owners, of course, want to realize as much money from their real estate investment as possible while you, as a business owner, want to secure an appropriate venue for your firm at the least possible cost. Experienced OfficeFinders are office space lease negotiators and know exactly how to analyze the cost of occupying the commercial space so that there are no unpleasant surprises in store for you.

You may have found what appears to be the perfect location for your business and, at first look, the lease costs appear to be a fair deal. Comparing the lease cost of the selected office space to the cost of other available properties in the same market area will strengthen your negotiating position and allow you to establish a final lease agreement that is beneficial to your company.

The real estate professional acting as your lease broker will include in the financial analysis each and every cost identified in the lease document as being your responsibility. These will include but may not be limited to:

• Rent per square foot
• Useable square feet available
• Operating expenses charged to the renter
• Caps on rent or operating expense increases
• Provisions for reduced rent due to damages or other circumstances
• Tenant improvement allowances
• Value of parking
• Incentives for lease renewal, longer lease term, expanding rented space, or early payment of rent
• Cost of utilities paid by renter
• Penalty for early lease termination if necessary
• Cost of adhering to any applicable county, state and federal regulations
• Repairs and maintenance required to be paid by renter
• Common area maintenance, repair, upgrade
• Charges to renter associated with security and cleaning services defined and selected by the landlord

Computer software applications make accurately calculating and comparing the total cost of rental easy. It does requires trained professionals to understand the complex lease terminology and translate this into accurate dollars and cents to be able to use in making your office space decision. If any areas requiring further negotiation are identified as a result of the financial analysis, you will be prepared with documented reasons for requests in lease changes. The assistance of a commercial office lease broker can save your company thousands of dollars.

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By: James Osgood