Entries Tagged as 'Office Space Negotiations'
Choosing to lease office space for lease is a big decision. The entire
process can be quite confusing and it is easy to get a less-than-perfect office space deal
if you don’t know what questions to ask and what certain terms mean to your
What does $XX.XX/SF
mean when stated in a lease or advertisement for office space? The cost
stated usually refers to the yearly lease cost per square foot. An example would be
1,000SF of office space quoted at $10.00/SF would mean a rate of $10,000 per
year or $833.33 per month. Although, in some markets it is based ont eh monthly cost. Make sure you know!
What does Rentable
Square Feet mean to me? The term rentable square feet refers to the total
square feet of office space used to calculate the rental rate. It may include
an apportionment for the lobby, halls, and other common areas in the building
that are available to you to use along with all the other building tenants.
What does Useable
Square Feet mean? This is the total square footage inside the walls of the
specific office space you are considering leasing; the acutula square footage you get to use. It refers to that area that
is for the sole use of the tenant and does not include any sort of common area.
Basically, this is the amount of office space, expressed in square feet, that
you will be leasing as private office space in which you can conduct your
I was presented a
lease that has the term “CAM charges” in it. What does this mean? The
acronym CAM stands for Common Area Maintenance and CAM charges refer to the
cost of services and charges to maintain common areas, including any parking
areas owned by the building owner. This can include landscape services, common
area lighting, parking lot maintenance, cleaning service for common areas, or
even snowplowing if that is needed. The actual expenses are shared by all
tenants and are quoted as CAM charges. This is calculated as $XX.XX/SF with the
SF being equal to the rentable square footage of the leased area. These charges are usually paid monthly based
on the estimated yearly cost. At year end, the actual CAM charges are
calculated and any refund or additional payment is settled with the tenants.
What is NNN when
appearing in a lease rate? The term “NNN” refers to any additional actual
expense items incurred by the building that are split between all tenants. This
may include insurance, property taxes, or CAM if CAM is not included separately.
It may be called “Additional Rent” rather than NNN. Be sure to ask exactly what
is included in the NNN because it can differ from landlord to landlord. It
probably will not include any utility costs except that used by the common
How utility costs are
calculated and are they included in the rent? In some smaller office
spaces, the cost of utilities may not be calculated separately but in larger
spaces, the tenant often has to establish their own separately metered
utilities. In some cases, the landlord has all unities metered and the tenant
is billed for a share of the total utilities based on the size of their office
space. Be sure to inquire about how
utilities are billed and exactly what you are responsible for paying.
What does Gross Rent mean? The term Gross Rent means the
landlord is paying all expenses outlined as NNN expenses and the tenant only
pays the Gross Rental amount stated in the lease. The utilities may or may not
be included in Gross Rent, so be sure to ask.
Can I get a short lease
to try out the office space? Most landlords offering leases on commercial
office space will not consider less than a one year lease. Some require two or
three year leases as a minimum. In general, the longer the lease, the more
valuable it is to the landlord and the easier it will be to negotiate what you
want. Don’t plan on less than a one year
I love the office
space I found but there are a few things in the layout that need to be changed.
How does this work? The layout of an
office space varies from building to building and seldom do you find the
perfect lay out. The landlord is likely to be reluctant to spend money on a
tenant requested change. It is traditional that new paint, carpet cleaning, and
general area maintenance be performed by the landlord. In some cases tenant
improvements can be negotiated at the landlord’s expense, often on the longer
term leases. In other cases the tenant may negotiate the right to alter the
layout at the tenant’s expenses.
Your best bet is to use ther services of an Office Space Tenant Represenative who will help you through the maze at NO Cost to you, making sure you avoid costly mistakes.
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By: James Osgood
Lease Negotiations , Office Rental , Office Space , Office Space Negotiations
One of the things that can complicate your budget for office space rent is operating expenses. There are two ways your landlord can handle these costs. The first is simple – if it’s $12.00, he charges you $12.00 or $1.00 per square foot per month and you are done. This is known as a triple net lease (NNN). The other method is over a Base Year. This means that in Year One of your lease that $12.00 is included in your rent number, but you’ll pay the difference in subsequent years. So if your operating expenses increase by $0.25 in Year Two, you’ll pay that difference either in a lump sum or in 12 installments – it depends on your lease.
What do these two methods have in common? Uncertainty... read more
Source: OfficeFinder Miami Member
Lease Negotiations , Miami Office Space , Office Leasing Tips , Office Space , Office Space Negotiations
Costar's Mid-year National Office Space Report is out with some very interesting and comprehensive information included. The report is a very interesting read. It starts out with a broad overview:
"The U.S. Office market ended the second quarter 2012 with a vacancy rate of 12.1%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 20,718,242 square feet in the second quarter. Vacant sublease space decreased in the quarter, ending the quarter at 48,602,935 square feet. Rental rates ended the second quarter at $21.38, an increase over the previous quarter. A total of 160 buildings delivered to the market in the quarter totaling 6,946,279 square feet, with 59,338,973 square feet still under construction at the end of the quarter."
But it also gets into much more detailed information by office market. I thought that one of the more interesting charts included was that of the historical office space rental rates.
Just a little bit of a roll since 4Q 2000 and has been pretty flat over the past 6 quarters. If I were a pure technician, I would say the chart is getting ready to bump up again. We will see.
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Lease Negotiations , Office Rental , Office Space , Office Space Negotiations , Office Vacancy Rate
You’ve found a
great commercial office space rental to house your business operations and, with a great
tenant representative (like we have at OfficeFinder) and any other needed advisors such as legal and accounting counsel; you
are deep into the process of negotiating the best possible office lease for the office space location you want and need. At this point in the negotiation process take care
to identify any relocation clause in the office lease and analyze how it could
potentially impact your organization’s operation and earning potential.
What exactly is an office space relocation clause? This provision is contained in some, but not all, commercial
office space leases, and gives the landlord the right to require the tenant to
relocate their office space within the same premises in order to provide space for another tenant’s
needs. Upon learning about this clause, you are very likely to say, “How very
unfair to me and my firm!” and most tenants would agree. Keep in mind that most
provisions in any lease tend to protect and be in favor of the property owner.
For this reason, working with an experienced commercial office space tenant representative is important to protect your interests.
In an ideal
situation, the landlord will simply agree to completely remove any office relocation
clause in the office lease provisions. Some landlords, however, simply will not
completely remove this verbiage, and then very clear, legally binding
provisions must be negotiated to protect financial losses and periods of
inability to effectively conduct business on the part of the tenant. It can be
especially difficult when the property owner attempts to insist on keeping the
verbiage “at the sole option of the property owner”, allowing the office tenant no
right to refuse the request to relocate without terminating the lease at
A scenario in
which the landlord’s flexibility provided by the office tenant relocation clause could
be invoked is a building consisting of three floors of 4,000 square feet of
useable office space each. The first floor is currently empty and Tenant #1 leases
3,000 square feet of the second floor; the third floor is occupied by Tenant
#2, a smaller office requiring only 700 square feet. A new tenant offers to
lease 8,000 square feet of commercial space, but only if the office space can
consist of the entire first and second floors. Clearly there is space on the
third floor for both Tenant #1 and Tenant #2. Due to the much larger rental
income from the potential new tenant who desires 8,000 feet of space on two
floors, the landlord would find it most advantageous to require Tenant #1 to
move to the third floor, sharing that floor with Tenant #2 who will not have to
relocate. Of course, Tenant #1 may be very unhappy to uproot and relocate. If
the lease were negotiated to avoid financial impacts to Tenant #1, the move
might only be an inconvenience instead of a total disaster.
Points to be
included in the negotiations for the relocation clause of a commercial office
space lease you are considering for your enterprise should include:
- A reasonable notice period should be defined in the relocation
clause to be used as a minimum guideline.
- The landlord should bear all costs caused by the relocation,
including but not limited to finish work, painting, and moving costs.
- Office space tenant improvements completed in the original space at the cost
of the renter should be redone in a comparable and agreed upon manner in
the new location at the cost of the property owner.
- Costs associated with relocating utilities and other services
such as network wiring should be borne by the landlord.
- Expenses incurred due to changing the business address, such as
letterhead, business cards and signage, including those visible on the
exterior of the building, interior doors and directories, and outdoor
signs, should be paid by the landlord invoking the relocation clause.
- The relocation should not stop the company from doing business in
that the space in which the company will move should be completely ready
before the date of the relocation.
- If the space is less desirable for any reason, the tenant should
have the right to terminate thie office lease, attempt renegotiation of the rental charges or receive
some type of incentive for relocating.
- There should be no verbiage stating that the landlord has the
right to terminate the lease should the tenant not agree to relocate. It
could be in your best interest to negotiate verbiage stating that you have
the right to terminate without penalty should you choose not to relocate
into the space offered.
area of a commercial office lease can be quite tricky to negotiate. Your real
estate professional will help you work with the landlord to obtain a relocation
clause that both parties can agree to, should such clause be required by the
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Office Leasing Tips , Office Relocation , Office Rental , Office Space Negotiations
The CCIM Institue has come out with their market analysis of the commercial real estate sector and it calls for very modest growth in the office space sector (full discussion below). Slower employment growth, as would be expected is the main culprit.
"Office Space: Office markets are showing only modest improvement. Office employment has increased 2.2 percent during the past year, compared to average growth of close to 3.0 percent during the past cycle and well over 4.0 percent during second half of the 1990s. Moreover, firms continue to find ways to squeeze more workers into fewer square feet. Even with modest growth, net absorption has risen for five consecutive quarters, but growth is exceptionally modest by past standards. With little new construction, vacancy rates have edged lower, falling 0.4 percentage points over the past year to 17.2 percent, according to Reis.
While the overall market is seeing only modest gains, there are a few pockets of strength. Major technology centers, including the San Francisco Bay Area, Seattle, Austin, and Raleigh, N.C., all continue to see strong demand. Rents have grown the most in the San Francisco Bay Area and New York, which is also increasingly driven by the tech sector.
Despite the sluggish pace of recovery, office property sales have increased this year. Properties in key technology centers, areas with a great deal of exposure to healthcare, and a few major energy markets, such as Houston, continue to outperform most other major markets. New York appears to be successfully navigating the slowdown in the financial services industry and is seeing an influx of technology jobs. Washington, D.C., however, has seen demand for space and buyer interest wane as continued anxiety and uncertainty about the federal budget has sent chills through market. The suburbs of Washington, D.C., are faring better with the tech sector fueling gains in northern Virginia and healthcare driving gains in suburban Maryland and Baltimore."
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Commercial Real Estate , Manhattan Office Space , New York Office Space , Office Space Negotiations , San Francisco Office Space , Seattle Office Space , Washington DC Office Space