The average commercial lease lasts between three and five years. What if the lease isn’t over yet, but you need to get out of it? The COVID-19 pandemic recently reached... Read More
So you’ve been tasked with finding your company a new space. Congratulations! You’re now in a position to help your growing company and demonstrate what a real problem-solver you are.
Unless, of course, this opportunity quickly becomes a real estate nightmare.
Well, worry not. We’ve got the experience to help you avoid the most common and costly commercial real estate pitfalls. Here are five ways to look, sound and be smart during the search for new office space:
1. Save your company cash.
There are two basic ways to minimize costs. The first to consider is subleasing, in which your company rents offices from a tenant who holds the lease to a space. This route has several appeals, one of the biggest being savings of 15% to 40% versus typical vacant office market rates. Chances are, you’ll also save on buildout and amenities, since the space is probably already outfitted with phone lines, wifi, heat/electricity, fire alarms and desks. Similar to subleasing, PivotDesk is a curated marketplace that connects people who need offices with those that have extra space.
The second path to savings—if subleasing is not an option—is to get free rent when you sign a new lease. This usually comes in the form of a “tenant improvement allowance,” which is a fancy way of saying the landlord agrees to pay for renovations and amenities. It’s a worthy request in any market, but especially those where supply outpaces demand.
2. Avoid eleventh-hour scrambles.
Finding new office space can take longer than you think—two to eight months on average for those with particular specifications. We recommend starting a search 6-12 months before the end of your current lease. (Keep in mind that you may also need several months for the build-out process and several days or weeks for your actual move.) An essential part of this stage is drafting a fit plan—with the help of an architect or specially-designed software—to confirm that the new space will accommodate your company’s needs.
3. Land in the right spot.
If your company is in a co-working space, determine if it’s time to move on. Are you packing two people to a desk? Is the office din hampering focus and compromising confidentiality? Have initial savings shifted, so that co-working no longer makes fiscal sense? If you answered “yes” to any of these, it may be time to go off on your own.
When looking for a private workplace, space calculations include number of employees and space per person. But savvy searchers also know to include extra for “Loss Factor”—the percentage difference between what landlords call Rentable Square Footage and Usable Square Footage. It includes unusable space like walls and shared areas (stairways, bathrooms). To avoid shelling out cash for unworkable areas, you want to find a space with a low Loss Factor but since advertised measurements will include at least some unusable space, you’ll likely need to hunt for more square footage than you think.
4. Think beyond the move.
No one relishes long waits for the elevator—or riding up ancient ones. So be a catastrophist and do the necessary due diligence on the building: who does maintenance and how well? How’s lobby security? Is the elevator reliable? What are late nights in the neighborhood like? These technicalities can mean the difference between general satisfaction and serious resentment.
Another decisive detail: your coworkers’ commutes. Solicit feedback from colleagues on any proposed new location. They’ll appreciate the consideration, and cut you a lot more slack for being included in the process.
You’ll quickly learn that most brokers represent landlords, so important things like lease terms are angled for the landlord’s benefit. That’s why it’s important to connect with a commercial tenant broker, who represents your interests and can help you and the landlord arrive at a mutually beneficial agreement. An attractive office space listing should lead you to one of these lifesavers. There’s little downside, since in commercial real estate the landlord pays the tenant broker’s fee.