Small Business Office Advice
How Much to Spend Renting Office Space
How much does it cost to rent an office? It's a negotiation. There is never a set price for renting office space.
You've found the perfect office space for your business and now it's time for the negotiation process to begin.
Although you don't mind paying fair market value, cash is tight and you can't afford to be taken advantage of. So how much should you pay for your new office space?
Unfortunately, there is no standard gauge for determining the price of office rental space since rents vary according to geographic area. Rental quotes are normally given per square foot on an annual basis, so reducing the size of the space is obviously a factor in the cost of the lease. But there are several other factors that also play a role in determining how much you can expect to pay for leased office space.
Not surprisingly, location is a significant factor in the cost of a lease. The better the location, the more you should expect to pay for the space. To minimize costs, you may want to consider looking for space in non-traditional areas, especially if your company heavily relies on the internet and other telecommunication mediums to do business.
Landlords are no dummies. Their goal is to lease their space for the longest term possible as a way of limiting vacancies. Longer terms translate into lower rental costs. But don't be lured into a long-term contract simply for the sake of a reduced rent payment. Future growth may require relocation to a larger space sooner than you expect.
Let's face it: Some commercial spaces are just better than others. You wouldn't expect a worn, outdated space to cost as much as a newer, updated facility, yet some landlords continue to quote rates based on the condition of the space when it was brand new. Stand your ground and factor the condition of the space and the building as a whole into your square footage valuation.
Rental costs aren't the only expense that needs to be considered in a commercial lease. The cost of retrofitting the space, or the buildout, also has to be taken into account. You may be able to convince the landlord to pay for some or all of the buildout expenses. If not, you will need to adjust your figures to reflect the buildout cost for comparison purposes.
A building with a high number of vacancies is ripe for a deal. Landlords are often willing to negotiate better terms just to increase the occupancy. Be aware of the vacancy percentage and use it as a tool during negotiation.
Multiple quotes are the most effective tool for saving money on an office lease. The more quotes you solicit, the more ammunition you will have during the negotiation process. As you begin your search for office space, create a cost comparison sheet that includes adjustments for buildouts, term lengths, etc. Then before you make your final decision, review the cost comparison sheet one last time to make sure the price you are paying is fair.
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