Which Office Space To Lease: The Financial Decision

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Office Space

Choosing an office space for lease can be a tough decision. In addition to finding the prime location, you want to be sure that your office space has all of the amenities and proper layout that you desire. You should also be certain that the lease is a financially sound decision for you and your company. It often takes a thorough financial analysis to determine if the lease you are intending to sign will be one which is best for you. The following will highlight some ways in which a financial analysis can play a key role in the decision-making process, and which office space to lease.

Helps To Highlight the Various Leasing Costs

When you complete a financial analysis you are laying out the individual leasing costs. Items such as base rental pay, operating expenses, operating expense increases, parking fees, common area maintenance fees and more will be detailed and allow you to get a better sense as to what the total cost to you, the tenant, might be. Many office space tenants make the mistake of not completing a financial analysis which can lead to serious financial trouble in the future when they find that additional costs are present and these costs simply can’t be met.  The financial analysis will list out all of the costs associated with a prospective lease and allow you to determine if the lease agreement will be the right one for you to sign.

Financial Analysis Can Aid In Landlord-Tenant Negotiations

In addition to providing you with a detailed list of leasing costs for your future commercial office space, a financial analysis will also aid in various landlord-tenant negotiations. You never want to simply sign the lease and not try to negotiate any of the lease terms with your landlord.  No term is set in stone when it comes to commercial office space leasing and there is always the opportunity to negotiate the best lease deal. When you have a complete financial analysis prepared for a specific office space, you can take those details with you when you speak with the landlord regarding certain lease terms. This will help you in the negotiation process and make it more likely that you get a reasonable deal on your future lease. The financial analysis will not only provide you with evidence of certain costs but will also show the landlord that you are taking any future leasing quite seriously.

Preparing a financial analysis prior to signing a lease is essential in commercial real estate leasing arrangements. This type of process allows you to thoroughly review your options and elps to ensure that the decision you make will be the right one now and in the future as well. A tenant representative can help you to prepare a financial analysis and will be with you when it comes time to speak with the landlord. By having this financial analysis completed, you will ultimately know which office space to lease by determining which is a financially sound decision for you in the long run.

Office Space: How These CAM Costs May Be Overlooked

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Office Space

Many times a business owner who is interested in leasing office space will forget to consider common area intenance, or CAM, fees when they are comparing prices and figuring out if the lease is affordable. CAM costs are fees which the landlord charges in order to offset their expenses related to maintaining the common areas of the office building. There are a few different reasons why these CAM costs can be overlooked.

Office Tenants Don’t Read the Lease

Fees, such as CAM costs, should be properly stated in the leasing agreement. However, some business owners are in such a hurry to get into their new office space and are overwhelmed by the legal agreements for leases that they simply don’t read the lease completely and fully. This can make overlooking the CAM fees pretty common. When you lease office space, you always must consider that CAM costs will be an issue for the tenant. Most landlords will make these fees a part of the leasing arrangement to ensure that they won’t be stuck with paying for common area maintenance.

New Office Space Tenants May Not Be Familiar with CAM Fees

If you are a new office space tenant, having never leased an office prior to this point, you may not even know that CAM costs are an issue. Many new office space tenants simply think that commercial office space rent is all that will need to be paid throughout the course of the lease agreement. This is not the case. Therefore, you should always be aware that CAM costs are common and must be factored into the total amount of the lease.

Business Tenants Might Not Have a Tenant Representative to Help

Many business owners go into leasing commercial real estate without a tenant representative by their side. This can be a costly mistake as they may enter into an agreement without fully understanding what they are doing. A tenant representative will always point out the CAM costs and make sure that the business owner tenant is able to afford such costs. In addition, a tenant representative will know how to negotiate with the landlord regarding CAM costs and may be able to get a lesser fee when it comes to CAM costs charged to the tenant.

CAM costs are easy to overlook when leasing commercial real estate, especially if you are new to commercial office space leasing. These costs can be expensive in the end and it is important to know how much you will need to pay for common area maintenance and see if you can negotiate these fees so that they are affordable. Before you enter into a leasing agreement, make sure that you thoroughly review the contract and be certain to focus in on any CAM fees which are included in the agreement. A tenant representative is the best person to have by your side when leasing office space and reviewing the agreement. This individual will ensure that you are properly informed as to any and all fees, such as CAM costs, which may be part
of your future lease.

Office Lease: How Long Of A Term Should You Sign?

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Commercial office space leases are unique in many ways. One way relates to the length of the lease term for the commercial office space. As opposed to residential leases which are usually on an annual basis, commercial leases are a bit longer. You can choose a 3 or 5 year lease in some cases while other landlords require a 7 or 10 year lease when they want the tenant to stay in the leasehold for a bit longer. This will vary by location and landlord preference as well.

When trying to decide which type of lease term is right for you and when you want to choose an office space to lease which offers you the desired lease term, the following considerations will help:

Desire to Permanently Lay Down Roots in the Area

For business owners who know that this town or business center is where they would like to stay permanently, it makes sense to lease the office space for as long as possible. Unless you are interested in buying an office space within a few years, you want to reserve your current location as long as possible, especially if you want to stay in the area for the long term.

How the Location Suits Your Business

If you look at a lease option in a particular area and know that this will be a lucrative locale for your business, you can lease for a longer period of time. For those business owners who want to lease an office space in a current location but may not be sure how they will do overall in that specific area, a shorter lease term is advisable.

Budget Issues

It is good to know that the longer the lease term, the less expensive the lease may be. If you are leasing with monetary considerations in mind, which most business office tenants are, then getting a longer lease, if possible, will yield better financial results for you. Be sure to inquire with your landlord as to the cost for shorter and longer lease terms. Some landlords will offer the lease for the same amount, no matter how long the lease term may be, while others are amenable to lowering the price for a longer lease term.

Plans To Expand Employee Base

Another factor which will help you to decide how long of a lease term to enter into involves your current and future employee base. If you are going to stick with the general number of employees in the future and do not foresee plans to increase your employee base, then you may want to sign for a longer lease term as you won’t have to be concerned with the amount of office space in the future since your employee number will remain similar to the employee number you currently have.

Deciding on the length of the lease is an important consideration. You want to try to think ahead and determine approximately how long you will want to stay in that same location. Even though this may be a difficult decision to make so early on, it is something which must be considered prior to signing your new office space lease.

Office Tenant Representation: Why You Need One

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Office Space

The commercial office leasing procedure can be a tricky one for many commercial tenants. Not everybody is well-versed in the commercial real estate field and going in on your own to lease office space can be a venture into the unknown. As a business owner, when you go into leasing office space, you want to be able to make intelligent, businesslike decisions.  With a tenant representative to aid you in the process, you can make the right business decisions with ease.

Here are some reasons why it’s important to have a tenant representative with you as you take every step in the leasing process:

  • A Tenant Representative Knows The Drill: As a whole, a tenant representative is the commercial real estate professional you need as they know how the procedure goes. You want to have the assistance of a professional so that you get the right property at the right price.
  • Help to Determine Your Leasing Needs: A tenant representative will help you to determine your leasing needs. In other words, how much space you need, what amenities you should have, the location which will be most ideal for your business and many more considerations. The tenant representative will think of all of the things you may miss and more.
  • This Real Estate Professional Knows The Market: When you lease commercial offices, you may not know what the commercial real estate market looks like at the time. Therefore, you may not know what the cost of the commercial lease is and what the norm is for leasing commercial real estate.
  • Negotiation Skills: A tenant representative is the perfect individual to have with you when you need to negotiate your future commercial space lease.  These real estate professionals are adept at negotiating these types of commercial office leases and will get you the best deal on your future lease.
  • Tenant Interest Protection: A tenant representative acts in the best interest of their client, the tenant. In something as difficult as a commercial real estate transaction, the tenant needs someone to act in their best interest and help them through the oftentimes difficult portions of the transaction.With the assistance of a tenant representative, you will feel secure in having this professional with you along the way.
  • Maintain Order In The Leasing Process: With commercial real estate leasing, there are quite a bit of steps in the process. The tenant representative knows how the procedure goes and will help to maintain order along the way. This guidance is especially important for the tenant who may not be as experienced with commercial leasing as is the landlord, who probably has gone through quite a few commercial real estate transactions in the past.

Going into a business transaction such as a commercial real estate lease without a tenant representative is simply not a good business move to make. In order to make your next lease agreement as favorable as possible and get the office space you desire, make sure that your tenant representative is present there with you.

Chicago Space: How Negotiable Is The Price Per Square Foot

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Office space leasing rates will vary in the commercial real estate market. The exact price of the office space rental will depend on a number of different factors. Some of these considerations include size of the rental space, location, amenities included in the commercial office space, parking options and more. All of these factors come down to the set price per square foot. In the past, price per square foot in commercial leasing situations was pretty much set in stone. There was little flexibility in the price terms and the prospective commercial tenant would just have to take it or leave it. Today, this trend has changed a bit.

Commercial Office Space Leasing Has Decreased

Since the economy has been less than stellar in the past few years, the need for commercial office space has decreased as fewer individuals and companies had the money to embark on a new commercial office space lease. This can be good for negotiating deals with the price per square foot for commercial office space tenants. Since landlords are more eager to occupy their commercial properties, they may be more likely than not to negotiate a bit when it comes to the overall price per square foot that they are asking.

Commercial Landlords Are More Willing To Negotiate To Get Rentals

Commercial landlords are well aware of the fact that they are not doing as well as they were approximately 8-10 years ago in the commercial real estate arena. With this in mind, they know that they must negotiate or risk losing potential commercial tenants who will ultimately go on to another commercial landlord who is willing to negotiate price per square foot. Even though the commercial landlord may not be getting their asking price, they are gaining a new commercial tenant and know that they will receive money as a result of the lease agreement.

Ways to Make Price per Square Foot More Negotiable

If you find a commercial office space to lease and the landlord is not exactly pleased about negotiating on the price per square foot, there are ways in which you as a tenant can make the price more negotiable and ensure that the landlord will be more willing to negotiate on price per square foot. First, make sure you are not too demanding with regard to other aspects of the lease. Don’t ask for multiple inclusions to the lease agreement and the landlord will be more likely to appease you when it comes to negotiating as to price per square foot. Also, be mindful of the current commercial real estate market. If the market in your area is still in a less than favorable position, you can feel more confident knowing that the commercial landlord may just agree to your price per square foot negotiations.

Negotiating as to the price per square foot terms is not as fruitless as you may think it to be. Review the current market and ask your tenant representative for additional ways to aid you in your price per square foot negotiations.