Entries Tagged as 'Lease Negotiations'
Failure to understand all the office leasing costs
There are more costs involved in leasing office space than just the rent. Many of these costs are quoted in different fashions so it can all get quite complicated when comparing alternatives. It becomes difficult to compare proposals on an apple-to-apples basis. In fact, it can even become difficult for an inexperienced tenant representative to decipher the various costs involved in comparing different office space alternatives.
How about the base year for operating expense pass throughs? This is the base year amount of operating expenses that your additional costs are based on. If you don’t pay attention or don’t know you could find yourself liable to pay for increases over a base year that could be 5 year old and cost you several dollars per square foot right off the bat. What if the building is only 25% occupied? Who will pay for the operating expenses on the vacant space? What is the norm for your market?
If your lease is a triple net lease are the expenses in line with what could be considered normal in your market or are they somehow higher due to extra landlord fees?
There are also different levels of tenant improvements which can be included in the lease. Landlords will very often offer a per square foot allowance for tenant improvements. Is this on the net rentable space or usable area or is it from shell condition or below the ceiling?
Another big one could be the load factor in calculating useable vs. rentable space measurement. It is the percentage of space on a floor that is not usable plus a pro-rata share of the building common area, expressed as a percent of Usable Area. It is also known as the Common Area Factor or the Loss Factor. A Typical load factor range is 10% to 18%. Some inefficient buildings can have load factors as high as 25% or more. Once again, what is the norm in your market?
The answers to these questions can make a significant difference in the overall cost of renting office space. Which is why making mistake number one in this series can be so damaging. Understanding all of the leasing costs and being able to communicate that information to you is an important part of what a tenant representative does. It can save you thousands of dollars in avoiding mistakes. Tenant representatives provide many more services to their clients and there is no cost to you in engaging their services. It costs you nothing, but can save you thousands.Lease Negotiations , Office Leasing Tips , Office Rental , Office Space , Tenant Representation
The second biggest mistake made by tenants looking for office space is not allowing enough time for the process. Far too often tenants will not get started early enough and have to settle for less than they could have had otherwise. This applies to tenants who are looking for conventional space and not executive suite, virtual office space, or co-working space. Typically a tenant can be in these spaces as soon as the next day or at least within the month.
Tenants looking for conventional office space under 10,000 should get started at least 6 months prior to their move in date. This will allow enough time to find some good alternatives, negotiate the best deal and have any tenant improvements completed for an on time move-in. This is true even in a soft market. In fact, even more so since there will be many more possibilities to investigate.
For office tenants over 10,000 square feet, at least 9 months should be allowed. The larger the tenant, the more complicated the process and more time is needed.
For more information on the office leasing process and timing, visit our Office Leasing Process Schedule.
Executive Suites , Flexible Workspace , Lease Negotiations , Office Leasing Tips , Office Rental , Office Space , Office Space Negotiations
The biggest mistake made by tenants looking for commercial office space is not engaging the services of a tenant representative; thinking it will cost them money. It doesn’t. A good tenant representative, like the ones we have at OfficeFinder, is invaluable in making sure you find the right alternative, negotiate the best possible deal and avoid costly mistakes. They do this every day and only get paid when you get what you want. And you don’t even have to pay them. It costs you nothing. Most Landlords hire listing agents and the tenant rep will share in that fee. If there is no tenant rep, the listing agent keeps the entire fee and you are on your own. Tenant rep services will save you money by making sure you do it right with solid information and advice.
Many tenants don't understand what a good office tenant representative does. A tenant rep does more than just find office space. A good tenant rep will coordinate the entire office leasing process from helping you define your needs all the way to ensuring your space plan works for you. In between, an office tenant rep will not only find suitable alternatives, help you negotiate the deal, but also help with information, advice, space planning and lease review.
Here are just a few of the many comments from businesses who have taken advantage of using an OfficeFinder tenant rep:
Our OfficeFinder rep did more than I ever thought that this free service would. I hope that this man gets a Raise. He really went above and beyond the call of duty. I thank him very much.
Elizabeth M. Palmisano - Phoenix, Az
The amount of information I received and the professionalism of our OfficeFinder rep was astounding. His knowledge and understanding of what I needed was overwhelming. He will always have my business, and I have no need to recommend anyone else.
Chris Van - Level 7 Productions - Los Angeles, Ca
I have never rated anyone at this high of a level but Jeff, our OfficeFinder Rep is exceptional. I don't know how he could exceed the level of service he has provided for us. I will not only recommend him to others, I will look for opportunities to recommend him.
Michael Shovlain - New Life Outpatient Center - Davenport, Ia
Thanks for your follow up. Our OfficeFinder rep has been extremely helpful in assisting us to find the proper offices over the last several months. We are now in our new location and I frankly don't know how we would have done it without him.
Jenny Makakoa - Xinify Technologies, Inc - San Ramon, Ca
The opportunity for tenants to renegotiate their office space leases at favorable rates may be ending as the recession comes to a close. In most markets landlords of office space for lease have seen their office renal rates decline by 20 – 30%. With a light at the end of the tunnel, many landlords would rather see office space sit vacant than get tied up in long term leases at reduced rates. The current general belief is that the commercial real estate market will start to see an upswing by early 2011. For tenants in the position to either renegotiate or relocate, the window may be closing on deep discounted rental rates.
Achieving the best possible lease terms is not a simple task. Landlords are sophisticated and know how to mitigate demands. The best bet for a tenant looking for office space for lease or rent is to engage the services of an office tenant representative to level the playing field. For landlords, this is their business and they are very good at it. An office space tenant only negotiates a new lease every few years. If you go it alone, it is not a level playing field. To top it off, a tenant representative service is typically free. Most landlords have a listing agent who is required to share their fees with tenant reps. The fee is already built in. If the tenant does not have an office tenant representative, the listing agent keeps the entire fee. It only makes sense that tenants looking to lease office space take advantage of getting a professional on their side.
We are very proud of our network of local office space tenant representatives. We cover over 550 markets with high quality representatives. The average time in the business of our reps is 12 years and many have achieved advanced designations that demonstrate their outstanding level of achievement and knowledge. If you are looking to renew or relocate your office space, let us help. Just fill out a short form letting us know what you need and we will put you in contact with one of our local licensed office space experts. We have been doing this online successfully since 1995. Give us a try. There is no obligation.