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Office Space Rental: Increase Your Business
The starting point for determining your operating costs under an office lease is identifying what services the landlord provides, what services the tenant must get directly, and who bears the cost. The following are common costs for office space:
Permitted use of the premises. An office lease typically has a section that sets forth the permitted uses of the leased space. It is to your advantage to make this clause as broad as possible, because your business may diversify or you may want to sublease space to another business.
For example, landlords may quote a monthly lease rate of $2 per square foot, typically meaning rentable square footage. The actual usable square footage of the premises is the space that you actually can use for your business operations. If you are unsure about how to determine your space needs, check out How Much Office Space Does My Small Business Need?
If the landlord pays for basic services but charges you for increases in the cost of rendering those services, ask how the landlord is calculating that increase. For example, some landlords may figure the base year for calculating the starting point of costs as one in which the building is not fully occupied (heat not necessarily fully on, not all lights on, and so on).
The structure of the lease payments may also be important. For example, a startup business without much capital may want two or three months of free rent at the beginning of the lease, with a lower rental for the first year and increasing rentals for the second and third years.
When analyzing the cost of space, you must also take into account other operating costs that the landlord may pass on to you, the tenant. Some leases require the tenant to pay for all cleaning, building security, air-conditioning, maintenance, and so on; this is a so-called Triple Net Lease.
Some leases require the landlord to provide and pay for basic services, while the tenant pays a pro rata share of any cost increases the landlord incurs for such services over the initial base year of the lease.
Keep in mind that different buildings have different costs and landlords may charge for services in a different manner. So the types and amounts of the costs that the landlord passes on to the tenant can have a big impact on the economics of a lease
About the Author When it comes to rent an office space, getting the right information can be a daunting task. That's why we put together this confidential report for you at office space rental
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