10 Tips for Renting Office Space
This guide is for anyone in need of office space and unsure where to start.
Why would finding an office require a guide, you ask?
Finding office space can be frustrating and tedious, even more so than finding an apartment (if you can imagine).
Oftentimes, it’s purely a question of information. Do you have the essential information—and nothing but— to kick start your search with confidence?
If you do, you can navigate the process like a pro. If you don’t, you’re susceptible to a landlord, broker or both taking advantage of you.
Here’s where to start.
1. List Your Office Space Requirements
List your criteria, knowing that they can of course change throughout the process. But the faster you generate a list, the faster you can eliminate some spaces from your search.
A list is easy to share with fellow stakeholders for feedback, including brokers. It also helps you recall your requirements faster so you can pounce on available office space faster.
Start with size (square feet), location and lease term (duration) and move on to any “must-haves,” like “must have a minimum of three bathrooms,” and so forth.
2. Decide on Short vs. Long Term Office Space
The average lease on office space in New York is three to five years. That can be a daunting time frame for some small or early-stage companies unsure of where business will be in a year, let alone three.
Sublets or shared space like coworking might be the most sensible option if you just need a few desks for the foreseeable future. Both offer flexibility and seats at a cheaper rate than standard rent. They have their drawbacks, but their impermanence can make them ideal. You can find both online, but a broker can locate available sublets faster for you. More on that below.
3. Ask a Friend for Tips
You likely know someone who has looked for an office before. If they’ve used coworking space, ask them about their experience. If they’re in their own office space, ask how they found it and what they would do differently, knowing what they do now.
And if they had a good experience with a broker, they can recommend one of those too.
4. Stay Online
Walking down the street, you see a flag flying from the side of a building. It says “office space for lease” and lists a phone number. The building looks great from the outside and is in a neighborhood you love. Can’t hurt to call the number to learn more about the available office space, right?
Unfortunately, calling the number on the sign usually results in a waste of time, and at worst, the beginning of an awkward journey to signing a lease on an office you still have doubts about.
First, the odds that the advertised space actually matches your requirements is slim. Standing outside the building tells you nothing about the available office space inside, and the only way to tour the space is to call that number and get more information.
And the number listed on those office space for rent signs usually belong to the landlord’s broker or listing agent. They work for the landlord. Not you. Their incentive is to satisfy the landlord so they can earn a healthy commission. Not help you find an office you love. They also know much more about commercial real estate than you do. If they wanted to, they could exploit that knowledge gap.
That’s where tenant brokers come in. They represent you. Have them call that number and speak to the listing agent.
In the meantime, keep Googling available office space.
5. Find a Broker Sooner Rather Than Later
As the story above illustrates, technically you could find and lease available office space yourself. You would just be at a disadvantage doing so.
Working with a commercial tenant broker is a no-risk, high-reward endeavor.
- They know the market and what to expect in terms of pricing
- They know where to start looking
- They do all the legwork for you
- They negotiate savings and amenities on your behalf
- Some are salaried and consequently less likely to rush you into a lease for the sake of commissions
- Most don’t cost you a dime out-of-pocket
No risk. High reward.
6. Organize Your Calendar
You can cut down on some tedious back-and-forth scheduling if there’s a regular time slot when you’re available to tour spaces.
7. Bring a List on Tours
Not just to keep you and your broker honest. Once you start touring spaces, you might find your priorities shifting. For example, the speed of the lobby elevator might never have crossed your mind as a matter of importance. Five minutes into waiting for it to come, though, you might realize that a slow elevator is actually an untenable feature. You’ll not only want to add this requirement to your list but keep track of which spaces featured the best elevator speeds. That sort of thing.
Traditionally, you’d have to write these kinds of details onto a piece of scrap paper or a PDF that your broker printed out. When you work with a SquareFoot broker, you receive a digital TourBook to track these details in one place on line.
Whatever system you use to organize your notes, make sure you have a system.
8. Don’t Be Shy, Make an Offer on Available Office Space
If you find office space you like, even if you’re not one hundred percent sure it’s “the one,” don’t waste the time. Make an offer. Doing so is a non-binding step in the leasing process. You can withdraw the offer at any time without penalty, making it a low-risk, proactive move that can yield a high reward.
Plus, the more offers you make on available office space, the more likely you are to get one, even if it’s not your first choice. An unfortunate reality in commercial real estate is that even the most sure-thing deal can fall through at the last minute. In which case you want to be ready to move on the next best available office space.
9. Consult a Designer
Once you’ve settled on a space, you need to transform it into beautiful, functioning office space.
You can negotiate the cost of renovations aka “build-out” and who covers it during the leasing process (another critical area where your broker adds value), but here are two basic options you might encounter.
- Turnkey Build-Out—in a turnkey build-out, the landlord pays for and manages the construction of all agreed-to modifications. If the landlord is in the driver’s seat, though, that means he determines the cost and quality of the materials and contractor. Cutting corners isn’t unheard of.
- Tenant Improvement Allowances—Landlords may opt instead to offer a tenant improvement allowance, a monetary contribution to help cover build-out costs. Some landlords offer it in the form of free rent (expressed in dollars per square foot). With a tenant improvement allowance, you can hire your own contractor, designers and upgrade or downgrade materials according to budget. You’re the project manager. You call the shots.
In either case, if you don’t have any experience overseeing projects like this, consulting a designer (even in an unofficial capacity, like a friend with good taste and strong DIY sensibility) will help you make more informed decisions during renovations.
10. Be Patient as Lease Signing Approaches
Unlike leases for apartments, commercial leas can take some time to negotiate and close. Not much you can do to fast-forward this step.
Each commercial lease is its own unique agreement, but here’s a look at the different types of commercial leases you may encounter in the process and the general framework they provide:
|Lease Type||Expenses||Use Case|
|Gross Lease||You pay rent, the landlord covers all operating expenses but may recoup his costs with “Load Factor” in the rent.||Any commercial space|
|Modified Gross Lease||You pay rent + a portion of the building’s annual operating expenses after the 1st year (base year) of your lease.||Any commercial space|
|Triple Net Lease||You pay rent + taxes, insurance and maintenance fees||Any commercial space|
|Double Net Lease||You pay rent + taxes and insurance||Any commercial space|
|Net Lease||You pay rent + some degree of taxes, insurance and maintenance fees||Any commercial space|
|Absolute Lease||You pay rent + all building expenses (taxes, insurance, maintenance), including roof and structure repairs.||Long-term leases to credit tenants|
|Percentage Lease||You pay rent + a percentage of your monthly sales||Retail space|
Lawyers on both sides (yes, you should enlist legal counsel for this part) review the language in the lease meticulously, circulating red-line corrections until both sides are satisfied. That can take several weeks, and in most cases, you’ll be glad it does. You’ll want to make sure the language in the lease the reflects exactly what you intend to agree to.
Ultimately, you can let your broker steer this process, but in case you’re wondering what’s taking so long to close, that’s what is taking so long.