Top Tips for Choosing Office Space

Are you in the process of starting a new business? Here are a few top tips that could help you to zero down on the decision making of choosing right office space for your business. Since your office space will represent your business, choosing the right location for your office space must not be taken lightly. Here are a few tips to consider before choosing an office space:

The Location: The most vital part of an office space is the location. You need to make sure location for your office is located preferably in a well developed office locality with good transportation facilities so that the client and employees can reach the office without any hassle. Getting a space in that locality is ideal for an office.

The Construction: It is important to evaluate the building, enquire the year of construction and ensure electricity and water facilities are adequate and there is a good backup system is in place in times of emergency. Choosing the right office space should be done right from the first time, so ensure all facilities are in place. If not, you’ll end up with aggravated employees and a lot of money and time will be spent on repairs..

Office Facilities: An office that provides extra facilities is a good choice as getting facilities set up can be a pains taking task. For example, if the building has a cafeteria for the employees working there makes it easier for the employees to have lunch and errands. Another thing is access to the office, pick one that allows 24/7 access to the office. Make sure to see the security system is in the building. Parking is also an important aspect to consider, ensure there is enough secure parking for your employees.

The Office space: Answer these few questions before choosing the office space. Is it big enough for your employees? Is there room to expand? If it’s a yes for both, you are on the right track. To make things easier ask for the layout of the office and preferably choose one which already is an office set up with a reception, cubicles, executive rooms and a meeting room.

Internet Facility: internet connection is a major requirement for any business in today’s world. Enquire if the building already has an internet service, if they do there’s nothing like it and picking it would be a smart decision. If they don’t find out who are the internet service providers in that area and how long the connection will take to put it to use.

Understand the lease/rental agreement: Understand the lease/rent agreement how long the lease/rent is for and if there are any added charges for maintenance, if required hire an expert. Ensure to read through the agreement twice and consult your lawyer about the ones that seem unclear to you. Ask about the changes you can make to the office and add to the agreement to avoid any misunderstanding in the future. Also clarify what extra charges will you be responsible to pay like property tax that is usually termed as ‘Additional rent’ or “NNN’ in lease agreements.

Analysing your options: Make sure you don’t settle on the first one you see even if you like it. Look for more options and see them and get all the required information for each office space. Then compare, first disregard the ones that had major issues like bad building structure, limited access, no security and no parking. Then with the ones remaining compare the prices and the services being provided. Your main priority must be the locality and it provides all the services. If you find a space that provides you with fully furnished office space with security, cafeteria facilities, parking and is a good structure it would be an ideal choice to make. The lesser effort in setting up of the office makes it easier for you and it gives you extra time to concentrate on evolving your business to higher level.

Eight Tips for Negotiating an Office Lease Renewal

So I’m meeting with our landlord tomorrow to discuss a lease extension, and I’m in the process of pulling together my thoughts on the renewal.

Our office building is owned by a small group of investors, so we have a personal relationship with the owners/landlord. I consulted with several colleagues of mine, and here are our top considerations for effectively negotiating a lease or extension:

1. Be a good tenant

It’s so basic to sound business practices, but it bears repeating, particularly when you’re dealing with individuals and other small business owners. Resolve issues along the way as amicably as possible -it all comes back to you in the end.

2. Start early and understand your options

Particularly in a very tight commercial real estate market, you’ve got to allow at least 9-12 months for the process to play out. It can take several months to research your alternatives, open up negotiations with prospective landlords (especially concerning tenant improvements), and then come back to your current landlord. And you’ll want to allow 2-4 months if you have to plan a move (assuming you’re an SMBE like us).

3. Understand your market, and particularly concessions that new tenants can extract.

While market rental rates are important to understand, there are a number of other considerations new tenants may enjoy, including tenant improvements, rent holidays, and other benefits.

Understanding these will not only give you a sense for what you might expect if you go elsewhere, but it can also help you negotiate your current renewal. Why shouldn’t you enjoy at least part of those benefits on the renewal?

4. Consult with (if not retain) a broker.

I’m a big believer in at least talking to experts in a field, and I generally recommend using them to represent you in a lease negotiation. Depending on the size of your business, this can represent anywhere from a $350k to a multi-million obligation over a 3-5 year period.

Brokers can give you a sense for the market, current conditions, and offer other valuable input. Face it -while you may know your business better than anyone, you’re probably not an expert in commercial real estate.

If you are going to use a commercial real estate broker, I suggest using a tenant only representative, as they are less likely to be conflicted than brokers who may represent either side.

That being said, they are a lot like realtors in that they only get paid when a deal gets done. The good news is they are frequently paid for by the lessor, but that may affect the terms of the deal.

5. Depending on how much leverage you have, work to ‘share the savings’.

Just as you may want to avoid the headaches and costs associated with moving, your landlord may have the same interest. If you’ve been a good tenant and are paying near market rents, the last thing your landlord wants to deal with is several months of vacancy, showing the space, negotiating and paying tenant improvements, and then having to deal with an unknown. So work to value how much benefit each side is getting out of the renewal and see if you can’t find some common ground.

6. Think outside the box and understand your landlord’s situation.

Your landlord is interested in three things – the underlying value of the property, current income/cash flow from the property, and avoiding headaches. Understanding the relative importance of each can be very helpful in your negotiations.

For example, commercial property is essentially valued at a multiple of cash flow (it’s a cap rate if you want to be specific) over a period of time, with an emphasis on future cash flows. If the landlord is thinking about re-financing or selling the property in 2-3 years, she will want to boost the cash flow in that later period. This can provide you with a path to reducing your near term rental outlays in return for increasing the rent at a time when it particularly matters to the landlord.

7. Put together a spreadsheet balancing overall costs for your various rental options

Feel free to let your landlord know you’re doing this, and make sure that you’re getting all the information you need to make a balanced and informed decision.

8. Get your hands on a bunch of actual lease agreements and extensions.

This can help give you ideas for different terms that you might want to incorporate into the lease that you may not have thought of. Of course, if you have representation, you should encourage them to do this -you’d be surprised how often this is overlooked.

There are lots of resources out there for looking at sample and (even more helpful) actual, negotiated lease agreements