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Important Questions to Ask before You Lease Office Space

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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 bottom line.

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 business.

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 areas.

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 lease.

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

Maximizing the Small Office Space

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Recently smaller commercial office spaces have become the solution for small and medium sized businesses. Some businesses have adopted non-tradition work spaces in which workspaces are shared by whoever needs them at the moment while other team members work on the road or meet with clients. Meeting spaces have becomes smaller and other creative solutions have been implemented to save overhead due to the last few years of tough economic times.

If your business happens to be located in a small office space, you need to maximize the space, both in terms of visual effects and efficiency. The idea is that clients should well welcomed and comfortable while visiting the smaller workspaces and meeting rooms. Here are a few tips for help you maximize a smaller office:

  • Walls: Paint the walls all a single color throughout the office space. Don’t decide to make one room different because it will ruin the visual effect of creating a larger area than actually exists.
  • Lighting: The brighter the commercial office space, the larger it will seem. Dark spaces tend to close in and appear smaller, so be sure to include bright lighting, preferably full-spectrum lights, to make the small office space grow to a larger size visually.
  • Plants: Choose plants that are tall but narrow. Any plant that spreads out widely will close in the space, but tall plants give an up and down visual effect that does not close the space in any way.
  • Floors: Choose a top-quality flooring that is extremely durable and use it throughout your office space. Do not place area rugs over parts of the floor; the idea is to create a larger visual space in your commercial office space by allowing the eye to move from area to area with any breaks in the flooring color or texture.
  • Decorations: Place groups of smaller artwork together rather than placing a single large piece of art in the office. The smaller groups make the brain think that there is more space than is if a large painting or poster is place on the walls. Strategically place a few quality items on tables, desks and other areas; whatever you do, avoid cluttering the areas in your commercial office space.
  • Work Stations: Purchase glass work stations for your office space so that the eye does not really see the object as a break in the visual effect. Large, heavy wooden desks will create a visual break and reduce the maximization effects.

Implement these ideas in ways that suit your specific office space and you will find that the space expands and grows larger. This will allow you to fully enjoy your new, lower overhead without experiencing any negative impacts.  

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By: James Osgood

Flexible Workspace , Office Rental , Office Space , Office Space Design

The Big Unknown: Office Space Operating Expenses

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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

3 Green Business Tips You Can Borrow from Whole Foods Markets

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"These days, it is important to try to work in green business practices when you’re starting a new business or trying to reinvigorate a current one. Consumers are putting a lot of value into businesses that show that they care about the planet and their communities enough to take steps to better both of them. If you are thinking of starting to lean into sustainable practices, Whole Foods Market is an excellent example of a business that is putting a lot of energy and effort into reducing their carbon footprint.

Here are just a few ways that any business can borrow tips from Whole Foods:

  • Technology like power monitors can help you reduce the amount of energy that is wasted in your office space.
  • Set up a system that will help your employees set up a carpool or support the use of public transportation.
  • Recycle and use recycled paper with a high percentage of post-consumer waste.

Whole Foods also does a lot to invest in alternative energy sources and provide informat

ion to the public about how they are trying to do as little harm as possible while running their business. Does your South Florida area business already do some of these things? Join us on Facebook and let us know some of the innovative ways you are turning your company green!"

Source & Photo Credit: Whole Foods Market via Morris Southeast Group

Green Office , Office Space

The Office Lease Signing

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 After you and your office tenant rep have negotiated a lease for your office space that protects the interest of your business and is agreeable to the property owner, it is finally time to sit down and sign the legal document, a binding office space lease that allows you and your team to occupy the chosen space. You should have your tenant rep there to cover any last minute questions you might have.

Having a real estate profession in the person of your selected office tenant rep present may seem redundant since you have sought counsel and advice repeated during negotiations from your tenant rep. Yet, verify that the changes you have requested to the office space lease have been worded correctly in the final document can be tricky for those with less experience. A tenant rep hasthe experience necessary to be sure the wording does not turn a change made to favor your interests into a clause that could trip you up and actually cost you money. Remember, your goal is obtain the best possible office space at the least cost with right to require or have performed the tenant improvements agreed upon and avoid passing rising or extra costs on to you. Another point your tenant rep will re-check will ensure that the rent increases over time do not become excessive.

Do not allow yourself to be rushed into signing the final office space lease without thoroughly comparing the notes you made of requested changes to the final document. Plan at least one to one and one-half hours for the lease signing to allow the thorough review. Whether on purpose or inadvertently, it is possible an important change could have been left out or misworded, changing the intent of the verbiage completely. If any part of the lease does not meet with the changes negotiated, stop the signing process and require an edited lease be delivered before signing.

You should also require a property checklist which itemizes the fixtures provided in the office space. For example, if the landlord is providing a refrigerator or table and chair in the break area, these items would be listed, inspected and any damages, however slight, should be noted on the checklist. Also, all walls, flooring, ceiling, doors, service outlets, and environment climate control units should be inspected during lease signing and their exact condition noted. Any damage, even small dings or excessive wear and tear, should be noted so that when you eventually relocate and release the office space to the property owner you will not be changed for these damages. Your tenant rep will help you go through the property and look for items necessary for your checklist. Many landlords use a standard checklist so be sure to note any items on the list that do not apply to the office space you are leasing.

You will need to bring payment to the lease signing table for the security deposit, any key deposits and rental payments, or whatever other payment arrangement is outlined in the lease. Customarily initial payments include first month of rent but sometimes rent for first and last month is required. Sometimes if significant tenant improvements must be completed before occupancy (be sure this is noted in the lease along with completion dates), or the occupancy date has been established for sometime in the near future, only payment of the security deposit may be required at lease signing with rental payment due upon taking occupancy of the office space. Payments can usually be in the form of a business check, money order, or certified cashiers check and in some cases payment can be made with a personal check, debit or credit card. Most landlords no longer accept cash due to the inherent danger of carrying significant amounts of cash and the possible accounting confusion if business cash becomes mixed with personal cash. Be sure to understand in advance what methods of payment are acceptable to your landlord and arrive prepared with the correct payment in one of the acceptable forms.

Once you and landlord have both signed the lease for your new commercial office space it is too late for further negotiations. You will be given keys to the property and it becomes your responsibility. You can then pat yourself and your real estate tenant rep for a negotiating job well done. 

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By: James Osgood

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