We all make mistakes however some of those cost more than others. Office space leasing is one of the last things tenants think about when setting up their business however it should be at the top of the list as little mistakes here can cost a lot of money now and later on. Below are a few of the common mistakes Tenants make when leasing office space and some tips on how to avoid them.
1. Not Starting the Process Early Enough: Smaller Tenants who are leasing less than 10,000 sf should start the process of finding office space at least 4-6 months before their ideal move in date or before their existing lease expires. For larger spaces you might need to start up to 12 months before. Finding the right space, negotiating the lease, tenant improvements (if neeed), and moving in take longer than you think. And depending on how available space is you can typically sign an office lease several months before you have to start paying rent.
2. Not Hiring a Tenant Representative: Building owners depend on listing agents to represent their best interests since they are experienced in that office market and in negotiating office leases. A local Tenant Representative who knows the market well can sift through 100’s of office spaces and narrow it down to only those that meet your exact office space needs. This can save you a lot of time and effort! In addition they represent your best interests in negotiating AGAINST the landlords to ensure that you get the best lease rate and terms possible.
3. Lack of Planning: Too many tenants start the process without having a clue as to what their current and future office space needs are going to be. It’s important to know and understand how many sf you need now and in the future, what your technology / telecommunication needs are, how far or close are the majority of the employees from your ideal location and are they willing to drive the distance?, etc. Again as mentioned above it’s important to start early enough to allow plenty of time to plan for current and future needs.
4. Not Calculating Enough Office Space for Future Growth: Office lease contracts are typically 3-5 years so it’s important to make sure that you determine your headcount for current and future office space needs. Otherwise you may find yourself in the 2nd year of a 5 year lease with no room to grow and be forced to either lease noncontiguous space in the same building or sublease your space and move your company in another building that can accommodate your space needs.
5. Only Focused on Lease Rate Not Overall Value: There is a lot more to office space than the office lease rate alone. Tenants should consider and compare all the factors of each building and pick the one that provides the most VALUE for the company. Things to consider when evaluating each office building are the location, amenities, technology, conveniences in the area, landlord flexibility, etc..
6. Not Comparing Apples to Apples: Not all landlords quote office space lease rates the same AND some interpret things differently. One landlord may say he is quoting $20 mg while another may say $20 sf. While mg and sf are different those landlords may think they are the same. Bottom line is no matter what they quote you be sure to ask what all IS and IS NOT included in their quoted office lease rate. Does the rate include electric, janitorial, taxes, insurance, maintenance, etc..? Some landlords pay for electric while others require that you do. Once you have all the information compare each property side by side and estimate what your monthly costs will be for each one.
If you would like to learn more about common mistakes in office leasing or would like assistance feel free to contact us!