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When it Comes to Renting Office Space, The Devil is in the Details

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When negotiating an office space lease or rental, you may find that the devil is hiding in some of the details and these can cost you lots of money over the life of the lease. Turn to your office lease broker for experience advice regarding how to negotiate out these demons before signing a contract for office space. An old idiom says “God is in the details” which means that anything you do should be done well. In this case, your goal is to turn those devilish little hidden clauses into the best possible agreement with the landlord of the commercial office space that everyone can live with for the life of the lease.

Initially all clauses in an office space lease tend to lean in favor of the landlord. Many of these clauses can be changed to at least give the commercial renter a fair exchange for the rent and other fees agreed upon. A few clauses to be on the look out for include:

Length of Lease and Renewal Options: The initial office lease period should give you enough time to settle in and determine how this location works for your business but not so long that you must pay a stiff penalty if you decide to move on after two or three years. If you do like the location and find the size just right for your immediate future, renewal options should offer you the right to sign another lease for a reasonable period without a huge rent increase.

Rent Increases: Speaking of increasing rent, watch out for the clause that establishes the amount or percentage at which rent can go up and the specific periods at which this change can occur. Rent should not increase more than annually and should have a reasonable cap set on it so that the cost of leasing the office space does not become outrageous in a short period of time.

Cost Transferal:  Be sure you and your office lease broker understand exactly what costs can be passed long to you or what percentage of those costs can be passed along. Examples can include property tax increases, specific repair costs not caused by your occupancy and the increasing cost of services to the building. Your rent increase should cover the costs associated with increased service costs or taxes and only those building repairs caused by you should be passed along to you.

Landlord’s Right to Early Termination: Check what verbiage is used regarding what, if any, rights the landlord has to terminate your office space lease early and what conditions must be met to justify such early termination. If this clause is too liberal in favor of the landlord, you could easily find yourself seeking different office space much sooner than your business plan set forth. This can be expensive and time consuming for your business and can be avoided with the right wording in this area of the lease.

Payment from Corporate Owners: Watch out for verbiage indicating payment can be sought from the corporate owners rather than the corporation itself.  While some office space owners like to have this protection in the event a business becomes financially insolvent, it does give a landlord too much recourse into the business owners’ private finances to allow entry into the final lease.

These are only a few of the clauses that an office space renter should be on the alert for. Turn to your office space broker for the best possible advice on all areas of the lease and lease negotiation process. 

Office Lease Location and Negotiations

By: James Osgood

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

Regus Continues Growing - Opening New Office Space Center in Rwanda

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I saw this headline and was surprised. "Regus to open new centre in Rwanda to capture rapid East African growth." With their most recent positive mid-year results, center expansion appears to be at the forefront of their strategies to continue their positive financials; center growth all over the world. Regus, the world’s largest provider of flexible workplaces, now has locations in seven countries in East Africa, including: Tanzania, Uganda, Kenya, Zambia, Mauritius and Madagascar, and a global presence in 97 countries.

Kigali City Tower Kigali City Tower

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Executive Suites , Flexible Workspace , Office Space

Regus Shows Good Growth for Half Year 2012 Results

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Regus, The largest operator of executive suite and flexible workspaces, showed solid reuslts for the first half of 2012 despite a lackluster world economy. They added 76 centers during the period.

FINANCIAL HIGHLIGHTS

  • Group revenue growth of 7.6%, Mature like-for-like revenue growth of 2.6%     
  • Adjusted** Group operating profit increased 63% to £23.3m (H1 2011: £14.3m)  
  • Adjusted** Mature operating profit doubled to £68.1m (H1 2011: £33.9m) with a mature operating margin improvement from 6.1% to 12.0%
  • Notional Mature EPS increased from 2.7p (2.8p adjusted**) to 6.2p (5.6p adjusted**)
  • Interim dividend increased 11% to 1.0p (H1 2011: 0.9p)
  • Strong balance sheet with net cash of £153.3m
  • New £200m revolving credit facility offering further flexibility for future growth

STRATEGIC & OPERATIONAL HIGHLIGHTS

  • Continued strong performance from the mature business
  • Substantial investment of £65.1m in new centres - 2011 new centres progressing as expected, turning contribution positive in Q2; 76 (2011: 48) new centres in H1 
  • 1,268 centres in 96 countries, offering an extensive global and national network to approximately 1.2 million members
  • New Enterprise Programme deals with Adobe, Aviva and Telefonica amongst many others
  • Third Place partnerships announced with NS Trains (Netherlands) and Extra Motorway Services (UK). Strong pipeline in place
"The structural shift to flexible working continues to drive our strategic growth plans and organisation.  To satisfy demand we continue to invest, adding a further 76 centres in the period and signing additional Third Place agreements. New centre openings continue to perform well, a strong endorsement of our expansion strategy."


Executive Suites , Flexible Workspace , Office Rental

Reduce Your Office Footprint by Clearing Out Clutter

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Maybe you’re a small business owner in the market for additional storage space for equipment you don’t need on a regular basis. Or maybe you’re a reseller that receives large shipments of equipment you simply don’t have enough room for at your place of business. Whatever the case, before you start scouring the classified ads in the hopes of finding a larger office space, perhaps you should first consider renting an offsite equipment storage unitto clear up that office clutter.

If your business needs require you to find extra space to keep surplus inventory, a long term storage facility could be the affordable answer that’ll keep you from having to pay higher rent for adequate space. Here’s just a short list of some of the benefits of renting a business storage unit:

  • Affordability. This one’s really a no-brainer, especially when you do the math and add up how much more you’ll be paying per foot for expanded space in a commercial warehouse. Storing a $1000 desk for $20 per month will only run you $240 a year, but throwing it away now is a guaranteed $1000 replacement bill later on. So weigh your options carefully before you start tossing furniture overboard. Once it’s gone, you can’t get it back.
  • Portability. Not every business owner stays in the same place forever, but often one of the contributing factors to staying in the same place for far too long is the high cost of moving your equipment and merchandise. By keeping it all at a central storage facility, you have the freedom to move your operation to a more visible or financially viable location.
  • Security. It’s not necessary to upgrade the security system at your place of business if all of your valuable goods are kept offsite. Most self-storage facilities include top of the line security systems that guarantee the well-being of your inventory.

If your business needs require you to find extra space to keep surplus inventory, a long term storage facility could be the affordable answer that’ll keep you from having to pay higher rent for adequate space.

However, make sure you explore your options. Don’t just commit to the first unit you come across. So some research and make sure you are getting the best deal possible. You may find that a unit outside the city has a better deal, but will it be worth the 10 mile commute? Think about these things when making your decision and you are guaranteed to find the best solution to clearing up space in the office.

This article was written by Matt Schexnayder. Matt is on the SpareFoot marketing team and writes for the SpareFoot blog. SpareFoot is the largest online marketplace for self-storage with more than 6,000 self-storage facilities listed nationwide.

 

Office Space Design

Mid-Year Office Space Market Report for the US

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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. 
Historical office psace 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