If you are out in the market looking to find office space, you may have learned plenty about office space for rent. Your head may be swimming with all the details, but now is not the time to lose your head. You need to be clear-minded when negotiating an office rental agreement. It’s one of the biggest expenses you’ll face in your business. We’ve got five hidden office space costs to be aware of when looking for an office for rent so you can be prepared when the time comes to negotiate with the Landlord. Landlords can be quite skillful at hiding certain office space costs. You and your advisers have to be equally skillful at uncovering them and negotiating in your best interests.
The first such cost is:
Base Year Expense Stop: What’s that you may ask? It all depends on the base year they want you to pay for. For example, you sign a base year contract for 2013 and in 2014, rents went up by $2 per square foot. If you have a location with 1,000 square feet, for example, then you will be paying an extra $2,000 for that location the following year. Since it’s 2015, you’ll want to negotiate for at least a 2014 base, preferably a 2015 base so you can keep your rates from going up so quickly in subsequent years on the lease.
Upgrades: A second hidden cost is paying for upgrades. A landlord may want to charge you, for example, for an Americans with Disabilities’ Act (ADA) compliant bathroom. That can cost more than $10,000. You want to get a lease where the landlord makes the space habitable for you and your clients without you paying for it.
Maintenance Costs: Third, you’ve got to wonder about maintenance and upkeep costs. Who’s responsible for taking out the trash, for example? If it’s you, then you don’t have to pay for it, but you may be expecting the landlord to do this for you. If he or she does, find out how much cost is involved. Also, simple maintenance tasks should come under the landlord’s jurisdiction. You don’t want to be renting a space and always have to pay for repairs. Make sure you get it in writing before you sign and make sure the price is reasonable.
Improper Expense Cost Pass-through: Fourth, the landlord may try to charge you an inappropriate amount for operating expenses like utilities and parking lot lights. Make sure that all the expenses make sense and add up to what you should be paying. You can ask to look at samples of past utility bills to ensure that you’re not overpaying. Negotiated properly, this can save you a few dollars per square foot over the life of your lease.
Restoration Requirement: Finally, a landlord may want you to do the bulk of the work to make the place inhabitable for the next tenant. Watch the end of lease life portion of your contract. Make sure you are not expected to do major repairs. You just want to move your stuff out and that’s it. Such end of term repairs should not be your responsibility.
We hope these five tips on hidden office space costs will help you plan better to negotiate for your office rental. We hope you will contact us with questions or if you need assistance in finding your next office.