Establishing or relocating an office space is a major endeavor. It may be your biggest foray into commercial real estate. When a business needs to move, there usually is a significant reason such as a substantial change in size or dissatisfaction with the current landlord. To help with the process, first answer these questions:
- What is the budget for renting office space?
- When does the business need to move?
- How will you mitigate any disruption to the business?
Six key factors when determining your new office space needs:
Office Size and Layout
One way to determine your office space needs, is to use the guideline of 100-200 square-feet per employee and leave room for growth. You can also try an online tool such as this Office Space Calculator. For layout, an architect designs an office to accommodate a company’s staff and other office space needs in the most efficient manner possible. They perform a procedure called “programming” whereby information is collected on a business’ needs and how it functions. This information yields a basis for the design layout of a space. Some commercial real estate landlords offer this “programming” service to clients free of charge.
As the adage goes, “location is everything.” Is your operation better suited for an urban or suburban environment? Is high-visibility a priority or an environment with more landscaping and green space? Do you desire on-site amenities? Will a site within a short walk or drive be an asset to them? Do your employees use mass transit? All of these answers will narrow your target areas.
Business owners know that a successful business starts and ends with happy employees. For commercial tenants, amenities enhance a work environment, and small perks can go a long way in recruiting and keeping good employees. To attract and retain the finest professionals, some office amenities that can help drive employee efficiency and convenience are,
- Free on-site parking,
- Under-building parking and storage,
- On-site café or market,
- Proximity to retail plazas and grocery stores,
- Outdoor seating and dining,
- Proximity to day care,
- On-site fitness facility, and
- Proximity to mass transportation.
Start with the proposed lease rate and then assess overall value. For example, price per square foot ranges from $22-$27 for Class A office space in Amherst, New York, a popular Buffalo suburb. To determine value, ask if necessities such as utilities, janitorial services and repairs are included in the rate. If not, add that expense to your monthly lease payments. A real estate firm with in-house construction services will estimate the cost of customizing and constructing the office space for you, known as tenant improvements (TI). Larger landlords will often pay for the TI upfront and amortize the cost into the lease rate.
Eager to avoid tenant turnover, many landlords offer incentives based on lease duration. The longer the lease term, the lower the rate. Additionally, a landlord typically provides a TI allowance—capital to help the client make changes to the office space such as moving walls, adding offices or conference rooms, etc.—if the company signs a longer lease term of 5, 10 or 15 years. Also recognize that a portion of your rent transaction pays for the maintenance of the “common areas” in the building (main lobby, bathrooms, elevators, etc.) if they are shared by other tenants.
This service is often undervalued during the search process. As a prospective tenant, you should spend as much time finding a commercial real estate firm that provides quality maintenance and professional management as you do finding the right location. Your office space and the building in which it is located is not only a major investment, it is a reflection of your business. When a problem arises, you want a quick response. Relocating to a building owned by an experienced landlord that has quality property management services will pay for itself many times over. Choose to invest your office space with a partner to address your business opportunities with tailored commercial real estate solutions.
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