Updated: Dec 16, 2019
By Michael Vannest, APR
When starting your own business there are many challenges and opportunities for mistakes. Some of the mistakes like issues with renting a new office can cost you dearly including even bankrupting the company you worked hard on creating. Here are five mistakes we have found clients make when entering into an office lease.
Lack of planning
For many start-ups, a lack of planning is a mistake that can cost a business dearly in terms of capital. Leasing more space than you need ends up costing a business more in the long term. A great tool to help with determining your office space size is loopnet.com’s space calculator. Here you can enter the amount of people will be working in your office and it will give you the approximate square footage you need.
A good rule of thumb when planning your office size is 100SF per person to be economical or 150SF per person to be comfortable.
Be sure to answer these questions before you begin your search. How much electric will I use?How much space do I need to fit my office equipment? How much office security will I need? What location works for me? Will I need parking onsite?
Not enough research on the property
Is the office building in great area that helps promote my business? What is the crime rate around the building? Does the landlord have a good reputation? Is the building up to code?
When a building has crime issues, maintenance and mechanical problems it can be detrimental to your business. Use reputable commercial real estate search portals such as 42floors.com, officespace.com and CoStar to assist with your search. Also, be sure to do a Google review search on the property manager.
Did not completely read and review the lease
This is probably one of the most common problems start-ups face with regards to their lease. Read and reread your lease. If you don’t understand something consult an attorney. If you cannot afford a lawyer you can check out basic lease terms here.
You need to be sure you are clear on renewal and auto renewal terms. What you utilities you are responsible for, what is the amount of time needed for submitting a non-renewal letter? Leases can be insanely confusing make sure someone (not your landlord) explains it to you correctly.
Using a broker with bias
Be wary of the commercial real estate broker. They charge high commissions and will take you to the properties with higher lease rates. Higher lease rates equals more money for the broker. Do you really trust someone that sees dollar signs when they you?
Underestimating their place at the negotiating table
Leasing an office is not like leasing a house or apartment you do have room to negotiate. Do not be afraid too. The landlord wants to keep the building full and typically there is an abundance of competition and other office locations nearby. If you really want to be in a certain building come to the table with a rental number in mind. You will be surprised how much wiggle room and power you have.
Ready to lease your next office? Check out our listings in Columbus, Cleveland, Pittsburgh and Cincinnati. We are a family owned and operated company who wants your business to succeed. www.evbco.com.