Renting an office can be very expensive as there are many financial factors to consider. It is also a long-term investment that you need to plan for financially. For every business owner, getting an office is a process that should be approached with the utmost care and consideration. For the most part, the money factor is the one that’s most challenging to go about.
There are many things that determine the total cost of renting an office. More importantly, the location, space and city you wish to set up office in can cause costs to vary. However, there are other things that also play a part in determining the value of renting office space, as explained below.
The rental rates
The rental rate is calculated using square footage. If you are able to figure out how much square foot you need for an office, it will be easier to estimate both your monthly and annual rent. In order to effectively allocate a budget prior to looking for office space to rent, you can research on the square footage sufficient for one employee, and then use the number of your employers to estimate. With that done, remember to factor in additional expenses that will likely be included in the lease deal. Most rental rates differ with the class of building, the neighbourhood and the amenities included.
The base rent
The base rent is the initial rent, a minimum figure used to initiate an increase in rent over time in the lease agreement. Other additional costs such as office maintenance and utilities will vary, which your lease contract will dictate. Some will be your responsibility while other expenses will be paid for by the landlord. More often than not, landlords increase the rent on a yearly basis. The percentage increase annually is always indicated in the lease agreement. Some of these extra costs are negotiable, and your broker may help you negotiate effectively.
Rentable square footage
The space you rent as an office is the usable square footage. In addition to this, the rentable square footage includes common areas such as lobbies, stairways and vestibules. In other words, these additional spaces are also rented to you by your landlord.
After identifying the office space that you like, you will need to transform the empty space into a functional office—that is if you are not renting a fully serviced office. There might also be a fraction of the expenses that the landlord will contribute towards. This is also determined when you are negotiating the lease.
It is possible to avoid getting an overpriced lease deal. Firstly, you can use the internet and learn the primary language of leasing and what the terms mean. That way, you will be able to negotiate a good deal effectively. Again, it is paramount that you compare the quotes of similar class buildings. It will allow you to notice quickly when some costs are way above what is expected.
Renting an office is not as complicated as it might seem, even if it is the first time doing it. After understanding these factors, early preparations will help you deal with every step of the process, allocating enough time to each.