In business operations, significant issues contribute to its success. A business with good management, competitive and professional staff and adequate capital will do well in the competitive world. The cost of renting office happens to be one of the significant aspects of running a business.
The truth of the matter is that it is often somewhat difficult to determine the exact amount of rent that you pay for the office, whether it is too much or too little. Well, if this is one of the things that has been bugging you for a few weeks or even months, you are about to find out some of the essential factors that go into place before arriving at the final figure of an office space rent. In addition, you will also find out about some of the ways to negotiate on the rental provisions of a lease.
The leadoff rent
One pays this rent for the initial term of the office lease. The leadoff rent is actually determined by your local real estate market. To be in a perfect position to figure out the amount of rent that you need to pay, you need to carry out an extensive research even before you negotiate your lease. In some cases, brokers can help you in this area.
However, they tend to get high commissions when tenants pay high rents and this makes them a not-so-reliable option. You may decide to look for different office space pricing on the websites of real estate market. Some of these websites will give you an idea of the amount of rent asked by most landlords in your locality and not the actual rents that most tenants pay in a leasing period. What you may find from the research may be surprisingly less than your anticipations.
Basis of rentals
During your research, you are likely to find out whether the rent is based on rentable square foot or usable square foot. This will help you determine the total amount of rent that you will be required to pay over a given period. First, rentable square foot rent is a type of rent that not only covers the actual office space used for the business but also the entire space for the whole building or premise holding all the available office spaces.
On the other hand, usable square foot rent only refers to the rent you pay for a particular office square footage used by your business – it is computed based on square footage for an office space. Many people do not know about this two or even if they know something about them, they often confuse them. The former will make the total rent for a particular period more costly as compared to the latter, which, is computed, based on the square foot used by the business. Understanding these two elements will enable you to know what to expect when you see the criteria for rent calculation in a lease.
Build-out of the space
In some office spaces, it may be necessary to have a build-out of the space depending on the core purposes of a business. The build-out of the space usually comes as an additional cost both to the renter and the landlord. That means the property owner can do part of it or even the entire build-out. You can also choose to do the build-out without including the landlord. Vitally, when you let the landlord do the build-out, you will repay the cost through a higher rent.
Therefore, the best option is to carry out the task on your own with the help of professional contractors. In the end, you will not pay as much as you would have paid if the landlord would have been responsible for the build-out. It is important to consider this factor when comparing rents as it will give you a clearer picture on how rents end up being higher.
Location of the office space
You should never overlook this one issue. Most real estate use location to determine the amount of rent for office spaces. Therefore, if you go for an office in a highly desirable location, you will have to pay more than you anticipate. In such instances, you barely get the opportunity to negotiate because the office space is in high demand. Office spaces in an out-of-the-way location will not cost you much in terms of rent. In fact, you can score the best discount rates for certain periods.
On a different note, the rents will also vary depending on the quality of an office building or space. Most offices in a state of the art office building will cost more compared to the ones you may find in an old mall or building despite close proximity. When determining the rent for an office space over a given period, these are useful factors that will help you get to the bottom of everything.