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9 Frequently Asked Questions When Looking for Office Space

April 28, 2017 | by Nell Lanman

Updated April 2018

Whether you’re hitting the office space market for the first time or you’ve moved your business before, staying focused on the immediate steps at hand will save you time, money and stress. That starts with honing in on the right questions early on in the office leasing process.

1. How much office space do I need?

The answer to this question is far from obvious, even if you’ve picked up and moved offices multiple times. If you’re a small company and expect to grow, you need to do some projections on head count.

You should also brush up on how to allocate square footage per employee. This can differ greatly by industry. Even within the norms of the open office, some industries require different working surface, desk allocation, and degrees of privacy. For example, lawyers who frequently have confidential discussions with clients need a different arrangement than a collaborative marketing team that primarily works on computers.

The general rule of thumb is to allocate 150 square feet per employee, but for a more granular analysis you can use our a space calculator.

2. How will the move effect employees’ commutes?

It is a good idea to solicit feedback from your team, no matter how small, on a suitable location for your new office. That doesn’t mean you have to take everyone’s suggestion, but they should feel you care enough about their quality of life that you took their commute into consideration.

For those searching for office space in New York, traditionally a neighborhood like Midtown East was a safe bet in terms of accessibility. But newer buildings, better cultural alignment, and solid values in other neighborhoods have companies curious about other locations.

In either case, a tool like a Commute Calculator can go a long way in helping you come up with a shortlist of optimal locations.

graphic; squarefoot commute calculator

3. What are my priorities in finding a new office?

It’s a good idea to ask this question often, too, as your preferences and priorities could very well change throughout the process.

We mentioned the importance of the commute earlier. That might be your number one priority going into the search until you start to tour office space after office in the “optimal” location and find that none feel like your next home. Or you thought neighborhood character was most important but a space on the other side of town offered a deal too good to resist.

Whatever you thought your priorities going in were, don’t be surprised when they change. But that doesn’t mean you should wait until you need space in hurry to start defining your requirements.

4. How do I find the right commercial tenant broker?

“Tenant” being the key word here. If you were to call the phone numbers on those space for lease signs, for example, you would find that almost without exception, the broker or agent on the other end of the phone represents the landlord. Not you.

Everything from the spaces you see to the drafting of the lease terms will be through the lens of the landlord’s benefit and that of his broker.

How do you find a commercial tenant broker who represents the interests of you, the tenant? If you’re a big enough company, they will often come to you—usually after they read about you in the news.  For the average business owner, though, that isn’t the case.

Finding a commercial broker tenant, much as it is in residential real estate, will likely start with finding listings that interest you. Finding quality office space listings should lead to a finding quality tenant brokers who can show you the space and find others like it.

Until fairly recently, finding quality commercial space listings was a touch and go experience. As commercial real estate matures though, tenants can expect to find more comparable experiences to residential real estate online.

5. How do tenant brokers get paid?

The mere thought of hefty brokers’ fees is enough to make the average person cringe. Fortunately, in commercial real estate, it is the landlord who usually pays the tenant broker’s fee.

A typical arrangement finds the landlord’s broker or listing agent splitting the commission on a closed deal with the tenant’s broker. There can nuances to the structure of the deal, but by and large the tenant is not responsible for a broker’s fee.

graph; big spending on office upgrades via Bloomberg

6. How do I get free rent?

“Free rent” usually comes in the form of a tenant improvement allowance, a monetary contribution from the landlord to help fund renovations. Depending on who you ask, 2018 is a great time to be a commercial tenant in line for a TIA.

In short, there’s more space on the market than tenants to fill it at the moment. Newly minted spaces at Hudson Yards and World Trade Center, combined with Midtown emigration and a competitive sublet market have contributed to rising vacancies for landlords.

Coupled with the pressure to upgrade building stock in neighborhoods like Midtown East to compete with newer Class A spaces further south has coincided, tenants find themselves in position to demand more aggressive build-outs and amenities.

Some landlords are obliging. Hence the Tenant Improvement Allowance.

According to recent reports, TIA’s soared 12 percent last year.

 

7. How long is the whole leasing process going to take?

This is arguably the first question you should ask. It impacts how far in advance you start searching for office space and what you’re willing to undertake to customize your space to perfection.

As a general rule, sixth months is a realistic timeframe between the day you start looking for office space and when you can move into a finished space. That’s even with the help of a knowledgeable, dedicated broker.

Deals that seem like a sure thing can fall through at the last minute, renovations can take longer than anticipated…even getting signatures on a lease can be a protracted step in the process.

photo; interior design plans

8. Do I need to hire an architect, designer, both, or neither?

The roles of interior designers and architects are similar enough that they can easily be confused when plotting renovations and construction on a new office.

In short, architects are concerned with a building’s structure and the spatial relationships, both within and outside the building. Their skills cover design, engineering, and managing construction projects (to name a few).

Interior designers are strictly concerned with the space inside of buildings, but they too can help plan spatial relationships and manage remodeling projects, such as the construction or removal of walls and partitions.

For average TAMI tenants, for example, an interior designer may very well satisfy their build-out needs. For large scale or specialized companies with unique space requirements, an architect might be best suited to re-imagine the space and come up with the structural changes to support their vision.

It is not uncommon, however, to employ both an architect and an interior designer. Their skills complement each other and are used to working with each other.

9. Can I negotiate expansion rights for other spaces in the building?

It might seem premature to start thinking about the next move, especially if you’re inking a multiyear deal on a lease. But it’s never too early to think ahead.

In the event your company expands even more rapidly than you predicted, you could quickly outgrow your space.

During the leasing process, you and your broker can always try to press the case for an expansion option in the lease, but generally, landlord’s aren’t incentivized to make such offers. To do so would mean making sure the stipulated space is vacant at the time you need it/exercise your option. And that could mean leaving the space vacant or renting it on shorter terms to multiple tenants. Scenarios landlords don’t typically favor.

That doesn’t mean, however, that your broker can’t negotiate some expansion rights on your behalf, like taking over space contiguous to yours should it become available. And in some cases, landlords will consider options for other floors in the building.

As you close in on a space, talk to your broker about expansion rights.

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