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Entries Tagged as 'Office Leasing Tips'

What is Your Landlord Hiding in the Fine Print?

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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

Office Leasing Tips , Office Space Negotiations

Commercial Real Estate Market Stabilizing According to NAR

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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.

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Office Leasing Tips , Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate , Tenant Representation

Choosing the Right Size for Your Leased Office Space

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When you contact an office finder service to locate a new or different space for your business home, one of the first questions you’ll be asked is,” What size office are you seeking?” Knowing how to respond to that query will make all the difference in the effectiveness of your search for commercial space to lease and your satisfaction with the office that you’ll spend many hours inside conducting business.

Leasing an office which is too small can make you and your employees feel cramped, increase ambient noise levels to near-intolerable, and reduce productivity and employee satisfaction. On the other hand, a space which is significantly too large, beyond predicted near-term growth factors, will result in many extra footsteps during each workday, excessive rent for unused square footage, and give the employees in the workspace a feeling of loneliness rather than the comfort of feeling part of a team.

To select the right office size for your business, consider at these factors:

  •  Executive Offices: These offices are those which need doors that close for executive privacy, usually those which house upper management. Determine how many executive offices you need based on the number of people who require this type of space. As a general yardstick, between 150-300+ square feet should be allocated to each of these offices.
     
  • Reception Area: Depending on the type of business you operate, you may need a lobby or waiting area in the front reception space. To determine the size of this area, consider the average number of people who may be waiting and allow space for seating, tables, lamps, and green plants. You’ll want your front office employee to have plenty of space to provide a professional first impression to those entering your office space. If you plan to place equipment such as copier, fax, and other items needing space for both the hardware and the person operating it, take this into consideration. Provide plenty of walking space around any equipment, furniture, and seating to prevent a feeling of crowding.
     
  • Meeting Space: Do you hold small meetings in your office frequently and conduct large meetings rarely? If so, consider saving money by locating nearby meeting facilities which can be rented only as needed. If, however, you hold large meetings frequently, it may be more cost effective to choose to lease an office space with at least one very large meeting room. Also, consider how many meetings may commonly be scheduled simultaneously. If necessary, select a space with several meeting spaces, but you can save rental charge if you can schedule meetings so that fewer meeting areas are needed. Since the square footage taken up by conference rooms is calculated into your lease fees yet the space may be used infrequently, it can be wise to avoid excessive conference spaces.
     
  • Useable Square Feet per Person: If your employee workspace is open plan using minimal partitions or desks separated by space only, you should plan for 90-125 square feet per employee for desks, filing cabinets, and other necessary furnishings. A closed plan requires more square footage of useable space per person for comfort, on average 125-200 square feet is needed for comfort. Take into account that you also need traffic areas for personnel and client circulation. Crowded walkways can lead to a sense of walking over one another and even result in accidents.
     
  • Community Areas: Every office space needs a space which can be used as a break area or lunch room so that employees can safely store bag lunches in a refrigerator, provide a place for coffee service, and allow those who like to save money by avoiding restaurant lunches have a space to eat. Estimate the size of this area based on what conveniences you plan to provide such as microwave, water cooler, coffee machine, sink, tables, and chairs. You may also need a common area for shared equipment such as copiers, paper shredders, and other common office hardware.
     
  • Sanitary Facilities: You’ll need to take into account restrooms if those are inside your leased space.
     
  • Growth Factor: Look at your company’s plan for future grow and the lease period. Do you expect to grow significantly during the lease lifespan? If so, you’ll want to allow for space in which to grow since there can be stiff penalties if you need to relocate before you lease period has expired. Keep in mind that moving is an expensive proposition since business cards, letterhead, signage, advertising, and other associated costs really add up and if proper planning can prevent an unnecessary relocation, it is well worth the time to carefully consider the future.
     
  • Seek Professional Advice: Choosing a qualified, experienced office locating service and seeking the advice of seasoned commercial real estate professionals can ensure that you choose the perfect office that is right-sized. Each business is unique and a trained professional can best assess your specific requirements. While you should use guidelines to do pre-planning, listen to the advice provide by your professional leasing advisor.

We also have some Online Tools you can use in evaluating how much office space you should rent:

The OfficeFinder Office Space Calculator will give you a fairly accurate idea of the square footage you need.

Our Conventional Office Space Rental vs Executive Suite Offices Rent Calculator will give you a price comparison between renting conventional office space compared to executive Suite Office space.

"How Much Office Space for This? How Much Office Space for That?" will show you the itemized sizes of different areas you may need.

To learn about how your office space should be measured to make sure you get all of the square footage you are paying for CLICK HERE.

Finally there is a lot of other good information related to office space design in other OfficeFinder Blog posts.

If you need office space, we can help! Just CLICK HERE.

Office Leasing Tips , Office Relocation , Office Rental , Office Space , Office Space Design

Lease Issues to be Aware of When Leasing Office Space

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The Tenant Advisor Blog has a good Infographic of key office lease issues. These are some of the most important office lease issues that need to be considered when signing a lease... after the price and business points have been negotiated and agreed upon.

office lease issues

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Lease Negotiations , Office Leasing Tips , Office Rental , Office Space

Tips for Securing Office Space as a Start-up Entrepreneur

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A few partners and I recently launched a new business venture and one of the first major decisions we had to make was regarding office space.  Should we simply all work from home and have a more virtual office space environment where we connect every day through skype, email, and phone, or should we shell out a few bucks to secure physical office space?  This can be a tough decision for new companies that are not producing revenue yet.

Possible Solutions

One of the challenges of a new company is that you do not want to lock in to a 12 month lease for an office space that is not incredibly desirable.  For example, if you lock in a 12 month lease on a cheap office space in an undesirable location, simply because you cannot yet afford a really nice space, then you may be a bit perturbed if the company starts bringing in solid cash flow 6 months later, and you can afford the nicer space, but you are locked into a 12 month lease.

One solution is to consider negotiating with business parks where you really want to set up shop.  See if you can get into a very small office in an environment where it would be easy to upgrade during the life of your lease.  The space may be smaller than you really want, but it also helps you get into the actual location you want to be at a price you can afford.  Then, when working capital becomes available, it is easy to transition to a larger, nicer workspace.

Other possible low cost office solutions are to pay for a virtual office space or Coworking style space.  Many top-tiered virtual office spaces actually provide conference room access on an as needed basis.  These deals come in many shapes and sizes, but it is common for some conference room access to be included in the deal, and for additional hours to be available on a per-hour basis.

Remember to think long-term when you are considering your office space plans.

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Executive Suites , Flexible Workspace , Office Leasing Tips , Office Rental , Virtual Office Space