The True Cost of Commercial Office Space

  • June 8, 2018
  • Office
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Though you might believe that the cost of commercial office space is as cut and dry as the number listed by the landlord, that is typically a very inaccurate thought.  Deciding to make the move into a commercial space will mean the need for a very clear budget on your part.  In order to have a precise number in mind, you will need to consider all of the cost factors that many overlook.  Here is an overview of the top expenditures to take into consideration when setting the budget for your commercial office space.

Rent

Obviously, you will need to pay rent on your office space.  The cost of your monthly rent will be largely dependent on the type of lease you sign, as different types of leases will cover different things.  Here is an overview of the most common lease types:

  • Gross Lease: Tenant is responsible solely for the base rent.  Landlord will cover all other costs up front, but may recoup his/her cost with a “Load Factor” in the rent.
  • Triple Net Lease: Tenant pays the rent plus property taxes, insurance, and maintenance fees.
  • Double Net Lease: Tenant pays the rent plus property taxes and insurance.
  • Single Net Lease: Tenant pays rent plus a portion of the property taxes, insurance, and maintenance fees.

Utilities

Calculating the cost of commercial office spaceAnother of the more obvious costs associated with your office space will be your utilities.  The cost of these will depend on what, if any, expenses are paid for by your landlord based on the provisions of your lease, as well as the size of your company, the square footage of the property, and the needs of your business.  Utilities may include electricity, natural gas, water, sewage, telephone, and/or Broadband internet services.

Equipment

Most new businesses will need to invest at least a small amount of money in purchasing the equipment that they need for their new office space.  This might include copy machines, fax machines, computers, printers, scanners, et cetera.  Obviously more hi-tech companies will require a larger investment here.

Furnishings

Unless your office space is coming fully furnished, you will need to consider how much money you should set aside to properly furnish your space.  This may include the purchase or rental of desks, chairs, lamps, shelving, file cabinets, meeting tables, couches, et cetera.

Renovations/Build-Outs

If you find an office space that perfectly suits your needs the way it is, more power to you.  However, the vast majority of tenants are going to want to make some degree of changes once they have signed the lease on their new space.  Stipulations can be negotiated into leases where the landlord may provide the tenant with an allowance that they may use towards these changes.  This is usually a reasonable amount, but if you are looking to make larger renovations to the space, it may not cover everything.  In that case, you will want to make sure that you have some money set aside to make the changes yourself.

Maintenance & Cleaning

If maintenance and cleaning are not included as a part of your lease agreement, these will also be costs that you will want to consider when looking for office space.  The size of your office will factor into cleaning costs, and maintenance will vary based on the original condition of the space and its existing systems.  This is why it is so important to hire a licensed and reputable inspector before committing to a lease.

Staff

Will you require a receptionist or office manager now that you are moving to a commercial office space?  How many employees will you have?  Will you add additional employees on right away or give yourself time to adjust in your new space to see how you are able to grow?  These are all questions that will need to be asked in order to properly determine a budget.

Commitment

The length of your lease will also play into your costs. The average minimum for a commercial lease is 3-5 years, so it is imperative to make sure that you are locked into a space that you can afford for the entire length of the lease.

Looking for Commercial Office Space in the Baton Rouge Area?

One of the best ways to avoid making mistakes and getting into a contract that doesn’t work for you, is to work with a licensed commercial real estate Advisor.  A skilled professional will easily be able to help you determine a reasonable budget, as well as negotiate a lease that has your best interests in mind.  If you’re looking to work with the best Baton Rouge has to offer, SVN | Graham, Langlois, & Legendre is looking forward to hearing from you.   Our dedicated team has over 99 years of experience helping clients secure the commercial properties that best suit their business needs.  Take a look through our database of available properties today and contact us to get searching!

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