In part one, you did your homework and determined what kind of office you want, where it needs to be, how large it needs to be and what you can pay for it.
Now we will go in search of this office.
From the outset I want to emphasize: don’t expect to see clear price tags on advertisements for office space for lease.
Every landlord has a different way of calculating rentable space and expenses and what is included or not in the quoted rent. Your calculations are going to specify what you want. Expect to do some interpreting when looking at offers and combining what you want to what the landlord is offering.
If you are looking for a single office in a suite of offices, you will be searching for executive suites. There are lots of them. Your task is much simpler than a large office tenant. Just go to Loopnet, filter for executive suites and the area you want to be in and shop the results.
If you have questions about specific executive office spaces, please feel free to call us.
How to Search for Office Space
By far the most comprehensive listings for the public are on Loopnet.com.
A good tenant rep will have access to other listing sources.
You can filter by neighborhood, price per square foot, size, and more. It’s quite comprehensive.
Here are a couple of caveats.
The listing may be on Loopnet.com, but not actually exist. Leasing brokers may continue to publish the listing in order to drive traffic. So in response to your inquiry you might get a reply like, “That was just leased. But I’ve got other space that you might like.”
Maybe. Maybe not.
The other caveat is that the pricing on the Loopnet listing can be and often is confusing. Every landlord has a different way of calculating rentable space. For example, you may need 2000 sq. ft. of usable space. The landlord may advertise 2000 sq. ft, but 200 of his sq. ft. are in a utility closet and a bathroom foyer, space you need, but cannot use.
And every lease can have different expenses that you will pay in addition to the rent. One example is common area maintenance (CAM) which can include a number of costs from landscaping to public restroom maintenance.
How do you find out what your rent bill is going to be? Ask the leasing broker for an itemized occupancy cost breakdown. Compare those numbers to what you budgeted.
If you are looking for a moderately priced office that is not in a prime location, you might check Craig’s list.
Currently, you will find Office Space under Housing.
You can filter by location, size and rent. When you filter for rent, it’s the total rent per month, not rent based on square footage.
What Is a Leasing Broker?
Most landlords employ a leasing broker to market space for lease. Leasing brokers function almost exactly like listing agents in residential real estate transactions. The leasing broker’s commission is a percentage of total rent bill for the entire lease term. It’s usually four percent. For example if the monthly rent is $1000 and the lease term is 60 months, then the commission would be $2400. ($1000 x 60 months x .04 = $2400)
The landlord pays this commission out of the rents he receives. To say this in another way, the commission is built into the rent and is ultimately paid by you, the tenant.
It’s not too much different than what happens in a residential transaction. The commission is paid by the seller, but the money comes from the buyer.
Your relationship with the leasing broker is probably adversarial.
She wants to lease space from her listing, get the highest rent possible and collect a commission.
You want to lease office space that suits your particular needs at an affordable price.
The two aims may be compatible. But in any case the leasing broker represent the landlord’s interest and her interest. Not yours.
If you are looking to sign a lease for office space, you should definitely consider engaging a tenant rep (sometimes referred to as a tenant broker).
The tenant rep will do most of the work described in this guide. He works in the office leasing market all the time and is likely to know about opportunities that do not appear on Loopnet or Craig’s list. And he should have access to office availability data that may not appear on Loopnet.
His aims will correspond to yours. You want to find and lease perfect office space at a good rent rate. He wants that too.
And when it comes to negotiating with the landlord, he will know what comparable space is renting for and about concessions being offered. His aim will be to negotiate the lowest possible rent for you. He could save you thousands.
Full disclosure: at Fischbach Commercial we function almost exclusively as tenant reps.
And how do we get paid? We share in the leasing broker’s commission. As I showed above, that ultimately comes out of the rent that you pay.
So you are paying for the service. Why not take advantage of it!