Searching, Selecting and Negotiating an Office Lease

When you are a business, either an existing business who is expanding or a startup business just trying to find a home for your business, your core focus is building and growing your business. Now you may be able to google “Office Space For Lease in Redlands” or any other city and find many options to choose from.  But there are many unknowns that may be outside your knowledge such as what type of lease is the landlord offering, rentable square versus usable square feet as well as what concessions is the landlord offering?  So how do I start searching, selecting and negotiating an office lease? All of these are very valid questions but how do you become familiar with these and carve our the best location at the best lease rate?

Tenant Representation

As a business you can hire an experienced commercial broker who Represents Tenant’s and has an experience in negotiating office leases and retail leases for both Landlord’s and Tenant’s.  A leasing broker’s services are generally free to Tenant’s, yep FREE.  That’s because most savvy landlord will provide an incentive for leasing brokers to bring them new Tenant to fill their vacancies.  A landlord has already factored in these cost and are not related to the rate they will offer Tenants.

Rentable SF versus Usable SF = Whatable SF?

In a standalone office building that serves one Tenant, rentable square feet equals the same as usable square feet.  However, in many multi story office buildings there are areas such as common areas, hallways, lobbies, bathrooms and other areas.  Sometimes these “common areas” make up 15% of the total building square footage, this is also referred to as a load factor.  Landlords do not want to lose money on these spaces so they will factor a 15% load factor into the lease, which establishes rentable square feet. See example below.

  • 3,000 usable sf X rate $1.50 psf = $4,500 lease rate (Stand Alone Building)
  • 3,000 usable sf + 15% load factor = 3,450 rentable sf X rate $1.50 psf = $5,175 lease rate (Multi Tenant Office Building)

Lease Terms and Concessions

Leases are binding contracts.  If you or your company sign a lease with a 5, 7 or 10 year term, you and your company are obligated to follow through and pay rent for the entire term whether or not you need or occupy the space.  Generally the longer the lease term, the more generous the landlord will be with the rate, tenant improvements and or concessions such as free rent.  If you seek a shorter lease term, you can expect to pay a higher rate combined with little or zero tenant improvements and concessions.

All these factors above will help you become more familiar when it comes to negotiating an office lease.  More information about free tenant representation by emailing, completing the form on this page or calling direct at 909-709-3781.

Negotiating an office lease

Negotiating an office lease

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