Understanding Your Rental Rates

There are a lot of components that are considered when your landlord comes up with a figure for the monthly rent in your commercial office space.  While some might seem obvious, others may surprise you.  Without a clear understanding of how your rental rate is set, it will be virtually impossible for you to know what type of property you can afford and to budget accordingly.  Read on so that you can start to recognize a good commercial deal when you see it.

Location

As with any type of real estate, the location of your commercial office space is going to be a big factor that determines what your landlord will charge.  Locations that are more remote will quite likely cost you considerably less than those in desirable areas with higher exposure rates.  These areas may have access to greater foot traffic, which leads to increased visibility for your business.  The buildings proximity to major roadways and public transportation options can also affect cost, being that the closer you are to these things, the more convenient they will be for your employees and customers.

Size

square feet impact office rental ratesThe size of your commercial office space will be another element that will greatly affect your monthly rent.  Depending on how many employees you have, you will want to ensure that you have an average of between 150-350 square feet per person, which doesn’t include conference rooms, private offices, break rooms, or reception areas.  The price per square foot of office space will vary greatly from city to city, and can even have large fluctuations in the same city, depending on the location of the space.  To give an example of how vastly different these numbers can be, in 2015, the average monthly rent in Atlanta, GA was about $1.74/square foot, while at the same time in San Francisco, CA, that number rose to about $5.43/square foot.  Working with an agent who understands the local commercial market will help you to get a better idea of what the average is in your area.

Supply and Demand

The commercial real estate market seesaws back and forth as the economy shifts, much like the residential market does.  Depending on the state of the economy at the time of your search, you can expect variances in the monthly cost of commercial office space.

  • Oversupply: A dip in the local or global economy will likely result in less people investing in or occupying real estate.  As businesses close, more and more spaces become available, creating an oversupply.  Landlords obviously do not want their real estate left vacant if they can help it, so this can be a great time to get into a new lease because many landlords are willing to make extra concessions to get their buildings filled.
  • Undersupply: A booming market, however, can create a higher demand for properties as new businesses open.  Ultimately, this can create an undersupply of available properties, which will drive monthly rents upward.  With a greater audience to appeal to, landlords are able to create some competition between prospective tenants, in an effort to secure the deal that is in their own best interests.

Condition of the Property

Most tenants are looking for commercial office space that is relatively turn-key, enough so that they will be able to utilize the space quickly.  That being said, if the property you are viewing has a laundry list of to-do items and maintenance issues, it could be a good negotiating angle to lower the cost to you, the tenant.  A building with many upgrades will have a heftier price tag, for obvious reasons.  If you are looking to be budget-conscious and you are relatively handy, you may save a lot of money by going with the first option and making some of the necessary upgrades and repairs yourself (with your landlord’s permission, of course).

Looking for Commercial Office Space in Baton Rouge or the Surrounding Areas?

The best way to make sure that you are getting a great deal on your commercial office space is to work with a trusted professional who can help you understand the ins and outs of your local market.  At SVN | Graham, Langlois, & Legendre, LLC, our skilled staff utilizes their combined 99-years of experience in the field to match our clients with properties of every size and budget.  We currently have several commercial office space listings that are suitable for businesses of all types.  Take a look through our database of available properties today, and reach out to contact a team member and begin your search!

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