The Top Three Office Leasing Concerns And How Tenants Can Come Out On Top
As a commercial real estate professional, my client base is largely made up of business owners who lease office space. At any given time, I am working with some who are opening new offices and some who are relocating existing offices. So, it’s no surprise that my conversations usually revolve around their concerns and how to be assured that they’ve made the best decision. The following three are the most frequent questions I hear, and my best answers.
Am I picking the best location for my existing staff?
The way business owners lead has changed dramatically over the last decade. Many business owners used to locate the office as close to their home as possible. Makes sense, right? If it’s my business, then I should have the most convenient drive. Well, maybe before, but not anymore.
It’s a good idea to speak with your staff and understand what they want in an office, including where they think it should be located. You might be surprised by what they tell you. Nothing would be more frustrating than going to the trouble of relocating your office only to find out that it’s not where your staff wants to be or commute to. The aftermath wouldn’t be pretty, as it would likely result in disengagement and frustration. On the flip side, if you move your office somewhere that’s more convenient for your people, they’re likely to be happier and more engaged, and therefore more productive at work.
How will my physical space help in recruitment and retention?
For many reasons, this is a great question. Personally, and maybe most importantly, it shows that the business owner is thinking about their people. And we all know that without people, there’s no business. I am seeing this firsthand now with a financial services firm whose office is drab and needs a major facelift. The new owner is taking over an office that is a little sleepy. He agrees that by renovating the office and making several necessary changes like upgraded furniture, new lighting, new paint and upgraded carpet, the company can create a more exciting environment that will not only promote more effective work, but also encourage more new hires.
It might be tempting to “go cheap” on furniture and finishes, but I urge you to look beyond the initial investment and recognize that creating an environment that your people will be excited to work in will pay you back in spades.
Am I getting a good deal?
We all can’t help but want a good financial deal on our office space. And it might sound simple, but the best way to get a good deal is to hire an agent you trust and let them guide you through this question. Further, hire one who knows the market inside and out. There are far too many nuances and complexities in even the simplest deals that it may be difficult for us agents to fully understand. If you hire someone who’s experienced, they’ll be better able to coach you through this question and ultimately negotiate favorable terms for your lease. They’ll let you know which areas of the deal hold more value. Sometimes, depending on the landlord’s situation, there might be more value in asking for free rent or tenant improvement dollars than trying to lower the rental rate.
Consider the following example: A tenant is in 5,000 square feet and paying $20 per square foot, which yields $100,000 a year in rent, or $8,333.33 per month. You decide you want a $0.50 per square foot reduction in rent over five years, which makes $12,500. Instead, you may have better luck if you ask for two months of free rent, equaling an extra $4,166.66 in savings. While this is not big savings in the world of real estate, you can still see the point I’m making: Arm yourself with a teammate who knows what to ask for and what holds the most value.
While I am asked a plethora of questions each day, these three tend to be some of the most common concerns for commercial tenants. Depending on your situation, you may have more and/or different questions. For instance, if you need to market your space for sublease, then you’ll likely want to know what the going rates are and what the lease up time is. Whatever your scenario, find an agent you trust, and make sure to lob as many questions their way as you can. That’s what we are here for.