What size office does our company need to lease?
You need to plan carefully when you calculate how much space you need for operations. Too large of a space and your costs become excessive, too small a space or having an inefficient layout will lead to operational difficulties. There are numerous considerations in this endeavor when employed in the proper manner can achieve optimal efficiencies. Examine the current state of your operations, then determine the anticipated growth in the coming years. Additional considerations:
What is your current number of employees
Will each employee require a workspace or will “hoteling” be possible
Does future growth require additional employees or will this be achieved through the use of current technologies
Anticipated growth trends-Executive? Administrative? Sales?
Recognizing your current head count will provide a well-organized space flow and foreseeing evolution will allow growth with no intrusions on day to day operations.
The amount of space required is generally determined by employee count and industry type. Anticipating a traditional “hard-wall” private office layout versus an “open” layout with few private offices will dictate the square footage required for each employee. Additionally an understanding of the number and size of conference rooms, work rooms, kitchens and storage/file rooms will assist in the determination of required space. Showrooms, distributors, warehousing all have specialized requirements. While there are numerous websites that can assist you with this calculation, the best method in assessing this matter can be achieved with the use of a space planner or interior architect. At the outset of our process Space Advisors will provide the insight and advice necessary to set the parameters of your businesses’ future home.
What is the distinction between rentable & usable square feet?
In general “usable” square footage is the amount of space your business actually occupies. In an industrial, flex space or retail lease, “usable” and “rentable” are often the same amount of square footage. In an office lease however, the tenant typically will pay an amount based on the “rentable” square footage. Simply stated in an office property there are numerous spaces that are not within the leased space, but are accounted for as beneficiary to each tenant. These include restrooms, janitor closets, electrical/telephone rooms, elevator lobbies and building lobbies which all tenants use. These items are part of what typically makes up the building common area factor. Depending on the design of the building most office buildings the total common area factor can range from 8-20% of the overall square footage of the building. Each tenant therefore pays a “pro-rata” share of the common areas, dependent on the amount of space leased.
When you are quoted a “rentable” square footage amount, this amount is the actual square footage your company will occupy, plus the pro rata share of your leased space attributed to the common areas. The more efficient a building design (say 8%), the less common area you will pay for and the more your company will actually occupy. Thus, if you need a space that offers fountains, wide open lobbies, vast atriums and a gym you can expect that your “usable” space will differ by as much as 20% of the “rentable” space you will pay for. Each landlord will engage their representatives to account for every square foot of a property to be leased accordingly.
Most owners adhere to what is known as the “BOMA” standard of space measurement. When the time comes to negotiate your lease, it is a wise exercise in verifying the space to be leased and negotiating the lease language to reflect the actual size per “BOMA” standards. Most equitable owners will agree to such a stipulation.
In the end when you arrive at the market opportunities from which to lease comparing buildings and their respective design efficiencies can have a significant economical variation. Space Advisors are expert in evaluating each of these complexities to assist tenants in making an enlightened decision.
What are the “NNN” or triple net charges?
One of the most asked questions we get is regarding triple net fees and what they are. Simply put the triple net fees are: common area maintenance, insurance and real estate taxes.
These are the charges a tenant pays in addition to their base rent. Dependent on the landlord these fees are paid up front based on an estimate of these expenses, with the tenant required to provide an additional payment at years end if this estimate is lower than the actual expenses incurred. The triple net fees are based on a pro rata share of the square footage occupied of a shopping center or showroom complex. The triple net charges can vary from location to location depending on the length of ownership, age of project, and maintenance intensity of a property. Calculating these charges prior to leasing space will permit an assessment of potential locations and allow a tenant to plan appropriately.
Who does the build-out on leased space?
An appealing office environment can make over a lackluster space into an organizations success, how to accomplish this and get the best possible deal?
Many lease rates include a portion or “allowance” for renovation of a space for lease. Minimal changes will leave a bare bones space for the tenant, and a smile on the landlords face. The lease rate, proposed improvements, actual construction and payment of improvements are all negotiable items in the lease. There are pros and cons to having the landlord do the improvements, but the most efficient use of build out dollars is generally utilizing your own contractor. Payment of your contractor can be negotiated with the landlord directly or the tenant can submit invoices to the landlord after construction.
Negotiating each of these items requires experience, market knowledge and the resources to accomplish a professional result. Space Advisors can assist you in this process from start to finish in order that what you envision can become a reality.
Negotiate own lease/purchase own why do I need a broker?
Consider the typical tenant. They retain their own legal representation. Employ an accountant for payroll/tax advice. The tenants largest expense is payroll, 2nd largest expense typically is for real estate, a considerable amount. They negotiate a lease every 3-5 years, often on their own accord. Why is this a bad idea? Think about it, a landlord works in real estate as a profession 8 hours a day, 365 days a year. In addition to being a real estate professional they generally employ a team that includes:
Brokers with market knowledge
Does going it alone, every 3-5 years, with such a large commitment make sense? Would you go to court without your own attorney? Face the IRS without an accountant? Does it make sense to face off against these odds when you can retain Space Advisors (generally at no cost) to represent your organizations interests in such a manner to level the odds more in your favor, yes it does. We always guarantee our results, in writing. The list of clients that have benefitted from our service is considerable and available for review.
How far in advance should I start planning a renewal move on a purchase?
A well negotiated lease is generally consummated 3-6 months prior to occupation depending on the required build out. In the event of a lease renewal explore what the market looks like at least 12 months prior to the expiration of your current lease. Even if the intent is to renew the lease, this will give you enough time to negotiate renewal terms and still be a viable threat to relocate should the landlord prove unwilling to offer market lease terms. Any negotiations conducted 9 months or less prior to the lease expiration favor the landlord in 90% of situations. Explore the market (you never know what else is out there), use the renewal to reduce inefficiencies if you expanded during the lease term (reducing your rent), and allow time to negotiate the renewal rate offered by the landlord. Utilize the leverage to be used if the landlord can earn interest rate reductions by having a greater building value by renewing your lease, if a large number of leases are coming due on the same property or the building is owned by a REIT that will be experiencing churn during the quarter your lease expires. Your lease provides value to the landlord, let Space Advisors leverage that value to your advantage.
What circumstances should I find space on my own?
In short, never. Finding a space without retaining the services of Space Advisors, exposes you to the same danger as leasing a large space on your own accord. In most instances Space Advisors will work with you on a consultancy basis, with the results guaranteed. Remember, it takes just as much time to negotiate a lease of 1,000 square feet for a year as it does to assist on a lease of 5,000 square feet for 5 years. By retaining Space Advisors as consultants, you avoid the dangers of self-representation and gain the benefit of having a listing agent that will work harder to lease a small space if the commission does not have to be split.
What are the considerations in a move – (moving kit)?
What are the benefits of a move
In what way does this assist the organizations potential
Disadvantages of relocation
Is a relocation financially viable
Does maintaining the status quo, provide viability
When is the optimal relocation period as it relates to sales cycles, fabrication or seasonality
Will personnel be lost during a relocation-can appropriately skilled individuals be retained in a proposed location
Does organizational strength permit a move(management, vision, confidence)