How to Find & Lease Office Space for Rent in 6 Steps

The process of finding and leasing office space is tedious as it can be time-consuming. If you are considering renting or leasing some office space, there will typically be a long list of requirements that need to be met in order for the landlord’s property manager to sign off. Here we outline 6 steps that help find the right place for you.

You may locate and lease office space for rent by looking for locations that fit your company’s existing requirements, budget, and expansion potential via web listings or brokers. Listing brokers or tenant brokers may assist in locating properties, scheduling walkthroughs, and negotiating leases.

Access to dependable internet, phone, and network services is one factor that may make or break an office space.

1. Assess Your Office’s Requirements

The first step in selecting an office for your company is to determine your company’s and workers’ requirements. Determine how much room you’ll need, your total budget, and the kind of office space you’ll need. Before looking for and viewing suitable office locations, figure out your parking needs, workplace layout, and future business growth.

You may assess your office’s requirements in the following manner:

Calculate How Much Space You’ll Require

Your space requirements are determined by the number of workers you have, the kind of workspace they need if you want conference rooms, and other considerations. Assume that each person will need 75 to 150 square feet of total space, with management-level staff requiring 150 to 400 square feet of dedicated work and office space.

Consider if you’ll need conference rooms, a waiting area, or other client-facing areas in addition to the quantity of space you’ll require. Finally, provide an area for office amenities such as a copy room, break room, kitchen, or file and mailrooms.

In general, multiply the square feet per employee (above) by the entire number of current workers, then add 30% to allow for shared spaces and other expenses. Then, to accommodate for future growth, add 10% to 20% (or another amount that is more in line with your company plan) to the total.

Examine the requirements of your employees and clients.

Consider what else your staff and customers want from your office space, in addition to how much room they require to accomplish their tasks. You may benefit from a specialized interior layout, access for workers and customers with special requirements, and parking availability, depending on the sort of company you have.

When considering employee and customer requirements, keep the following in mind:

• The best layout of your office building is determined by the sort of workstations your workers want, the quantity of meeting space and client service areas you require, and if you require a kitchen, mailroom, or other amenities.
• Parking availability – Your parking requirements will vary depending on the amount of staff you have and how many customers visit your company on a regular basis.

A computer business, for example, may need a more open, collaborative work atmosphere, while a doctor’s clinic may require more partitioned workstations with individual, private rooms.

Establish Your Location’s Requirements

Your new office should also be in a convenient location for your employees, clients, and suppliers. Consider how accessible major highways and public transit are to each possible office. Make sure the new office is near to your target clients and any companies you deal with or depend on in your day-to-day operations before negotiating a lease.

• Proximity to target customers – If you run a company where clients come to your office regularly, your office should be near to them.
• Accessibility – How accessible your workplace is to workers and customers is determined by its proximity to major roads and public transit.

A legal company, for example, may want office space within walking distance of the courtroom, but a restaurant may prefer accessibility to food suppliers and favored customers.

Select an Office Building Class

The class of an office is defined in relation to other building classes and indicates the quality of its construction and facilities. Class A, Class B, and Class C are the three primary types of office buildings, each having its own age, facilities, and tenant quality. Determine which type of space is best for your company after evaluating your demands based on your individual business operations and employee and customer needs.

There are three types of office buildings:

• Class A — The highest-quality office buildings on the market are classified as Class A. These are usually the newest structures, which are well-managed and feature high-profile tenants. They’re ideal for legal, marketing, design, and finance organizations that want to wow customers with their offices.
• Class B – Some Class B structures are older Class A structures with the ability to be rehabilitated to Class A standards. Other Class B constructions, referred to as purpose-built Class B buildings, were built with the intent of providing practical office space at a lower cost than Class A space. If you want a great room but don’t require the best of the best, this is the building to choose from.
• Class C – Class C office buildings are the least attractive since they are older, in less desirable areas, and need considerable repair and care. These structures are often 10- to 15-year-old Class A or 5-year-old Class B structures, and they’re ideal if you only need an inexpensive somewhere to run your company.

Time Constraints

Consider how fast you’ll need to relocate into your new workplace when picking an office. It’s critical to retain continuity in business services, whether you’re a startup or an established company, even if you’re moving. Identify places that may be rented within your time limits if you need to move into your workplace within a certain amount of time.

Your selections may also be influenced by the length of your selected lease. Commercial leases are normally three to 10 years long, however certain buildings may only be available for short periods of time. A short lease gives you greater flexibility by reducing the amount of time you’re required to stay in the same place. A long-term lease, on the other hand, allows you to lock in a cheaper price for a longer period of time, but committing to one place for many years might restrict your development or create financial difficulty.

2. Make a budget estimate

Calculate a budget for your office based on local rental rates, your space and service requirements, and your budgetary limits. Multiply the average local pricing per square foot by the space your firm requires, as determined in step one, to arrive at your optimal budget. After that, factor in maintenance and utility expenditures, as well as a check of your financial records, to arrive at a reasonable budget.

The following are steps to determining your rental budget:

Calculate the average cost per square foot.

The cost per square foot of office space is mostly determined by the location. For instance, office premises in Atlanta and Dallas cost $1.74 and $1.92 per square foot per month, respectively. However, office space in San Francisco and New York City costs $5.43 and $6.16 per square foot, respectively.

Calculate the monthly cost of your desired office by finding the average cost per square foot in your region, taking into consideration the kind of building and its location, and multiplying it by the amount of space you want based on an assessment of your company’s demands.

Fees for Common Area Maintenance

The expenses you pay to maintain common spaces of your office building, such as the lobby, elevators, and corridors, are known as common area maintenance fees. CAM costs are usually computed per square footage and vary from 15% to 35% of the total lease payment, depending on variables such as the building’s age and insurance rates. Find out what average CAM costs are in your area and include it into your entire budget.

Utilities are included.

Electricity costs $1.34 per square foot per month on average for an office building. Unlike certain residential rentals, which include the cost of utilities in the monthly rent, most commercial office building leases do not. Once you’ve determined how much room you’ll need, calculate an expected utility budget based on typical utility expenses.

For example, if your monthly rent is $2.00 per square foot, your targeted square footage is 1,500, and you expect to spend $1.75 per square foot in CAM and utilities every month, your monthly leasing budget should be $5,625.

3. Look for office space for rent that meets your requirements

Hire a tenant broker to find homes within your desired specifications after you’ve identified your wants and estimated a budget. A broker can help you with local expertise, lease negotiations, and save you time. A broker isn’t necessary, and if you want to handle it yourself or do some preliminary exploring, LoopNet’s online search engine is a good place to start.

Consult a Tenant-Broker.

Listing agents, who work for landlords, and tenant-brokers, who represent tenants’ interests, are the two categories of commercial real estate brokers. The listing agent is always obligated to act in the landlord’s best interest, whereas the tenant-broker is not necessarily obligated to act in the tenant’s best interest. Tenant brokers often receive a portion of the commission paid by listing agents, which ranges from 3% to 6% of the total lease (paid by the landlord).

Real estate agents aren’t essential, but they provide crucial skills, information, and contacts that would take an ordinary company owner years to gain. Websites like Regus and LoopNet are useful tools, but they can’t replace a real estate professional’s knowledge. Real estate brokers can save you time, assist you with the lease negotiating process, and more, in addition to giving insider information.

Commercial brokers may assist you with a variety of issues, including:

• Local expertise — A local broker will be familiar with your neighborhood and may possibly have worked with possible landlords before.
• Many area real estate brokers are aware of homes that haven’t been posted yet or may become available in the near future. These “pocket listings” are a great method to find in-demand homes before they become available on the open market.
• Negotiations — As with any contract negotiation, having a professional on your side is recommended. A leasing agent can assist you in understanding the terms of your lease and avoiding frequent problems such as restrictions on your ability to sublet the space.
• Spending less time – The process of locating, investigating, and seeing workplaces takes a long time. A broker may save you time by reducing the amount of time you spend searching for an office and allowing you to focus on growing your company.

Because a tenant-broker isn’t required by law to operate in your best interests, make sure you ask questions about their expertise, size of business, remuneration structure, and market knowledge before employing a broker.

Use an internet platform like The Broker List to find a local real estate broker. You may search by name, firm, or zip code. Alternatively, ask if anybody in your network has any experience with local brokers.

Make Effort

Use a website like LoopNet or CoStar to locate properties that are available in your region, in addition to employing a real estate broker or leasing agent to help you with your search for office space. Simply click the “For Lease” option on LoopNet, choose the sort of space you want from the dropdown menu, and input your geographic location. After that, you may filter spaces by price and size, as well as see walkability and transportation rankings.

Before dealing with a real estate agent, use an internet resource to educate yourself about the local real estate market. Websites like LoopNet may also put you in the proper way with a commercial broker so you don’t spend time looking at buildings that don’t match your demands.

We propose that you use a local broker to assist you in finding office space for your company. You may, however, opt to do it alone. Keep in mind that you’ll have to manage various steps of the leasing procedure without the help and local experience of a real estate agent.

You’ll have to manage each stage of the leasing procedure on your own if you don’t use a broker:

• Locating office space that is available
• Attending walk-throughs and inspections and scheduling them
• Dealing with a lease

4. Do some research

Reduce your alternatives to the most promising office spaces that suit your requirements, get background information, and organize visits with the selling agent. Before each visit, acquaint yourself with the property by researching security features, the age of building mechanicals, and utilities. Observe the neighboring communities, parking availability, and other elements that are vital to workers and customers when you visit.

If you deal with a commercial broker, he or she will provide you with background information on each property and coordinate walk-throughs with listing agents. After that, your broker will accompany you to each walk-through to ensure that all of your questions and concerns are answered. If you want to lease an office without using a broker, you’ll have to contact the listing agents on your own to organize appointments and walk-throughs.

When considering suitable office locations, keep the following in mind:

Areas Surrounding

For your staff and customers that come to your business for meetings, the environment around your office is crucial. When touring an office building, be sure the surrounding area is as suitable for your company as the office space itself. A tour of the building and surrounding neighborhood is also the greatest approach to determine if there are footpaths, sidewalks, or other circumstances that will assist people in finding your company if you’re interested in the walkability of an area.

Accessibility

Accessibility of your office building is an important concern for both your staff and your customers. If you just work in one or two towns, make sure the office is at a handy location for them. Make sure your new office space is handicap accessible, as mandated by the Americans with Disabilities Act, regardless of the sort of company you run.

Features of Security

The relevance of security elements varies depending on your industry and workplace location. If you want to save money or be closer to possible consumers by locating your company in a less attractive neighborhood, ensure the building has enough external lighting, gates, video cameras, or other necessary security systems. If your staff will be working late at night or if your company has a substantial quantity of cash or precious items on-site, security is very critical.

Age of Construction

Plumbing, elevators, escalators, and heating and air-conditioning systems are all part of a building’s mechanicals. You may not be responsible for repairing or maintaining mechanicals as part of your lease agreement, but you don’t want to lease an office building with broken air conditioning or plumbing. To ensure you won’t have any problems with the building, ask the leasing agent when the mechanicals was last upgraded.

Amenities

The amenities of an office building are extra in-house services accessible to tenants of the space. Cafes, dry cleaning facilities, gyms, and daycare services are available in some bigger office buildings. Whether these services are essential to you, ask the leasing agent to show you what’s available when you tour the building and find out if the different facilities come at an extra fee.

Other occupants

Keep an eye out for the different types of renters in each property you visit. Consider moving to a facility that is more suited to your firm if a tenant brings in clients who aren’t consistent with your professional identity. It’s also vital to think about who the building’s key tenants are. If an anchor tenant closes the shop, the space may become less enticing than expected.

Availability of Parking

Find out how many parking spots you’ll be entitled to if you lease the office if the building doesn’t have one. Some buildings may not have the parking places you need, depending on the number of workers in your firm and how often customers will visit the office.

5. Organize the Financials of Your Company

The kind of office space you may lease is determined by the financial status of your small company. Two to three years’ worth of profit and loss accounts, current credit reports, and references show prospective landlords that you’re a dependable renter. Prepare financial documents before negotiating a lease so you’ll be ready to go ahead after you’ve found an office that meets your requirements.

Before leasing an office, take the following steps to organize your company’s finances:

Organize financial records

Prepare your financial papers, including balance sheets, tax returns, profit and loss statements, and bank records, before commencing your search for the right workplace. We suggest acquiring records dating back two to three years, but if you’re a startup, this may not be doable. Organize financial documents to show your present and long-term capacity to satisfy the financial commitments of a lease, regardless of the age of your company.

Examine your credit rating

When a prospective landlord considers your offer to lease an office, one of the first things he or she will look at is your personal and maybe business credit. It’s vital to have a thorough grasp of your creditworthiness, but doing so may need a hard investigation, which may lower your score.

References

Referrals from a prospective tenant’s previous landlords are often requested by building owners. Reference letters allow a landlord to learn more about your company’s leasing history and help them decide whether or not to rent you office space. Obtain letters of recommendation from your prior landlords early in the leasing process so you’ll be ready to move in as soon as you discover a new place.

Fill out a Personal Guarantee Form

A personal guarantee states that the owners of your company will adhere to the lease’s conditions, even if you leave in the midst of the term. As part of the leasing procedure, some landlords may ask for a personal guarantee. Prepare to sign a personal guarantee by examining your personal finances to show a landlord that you are personally capable of paying the rent if your company fails to do so.

6. Pick a location and negotiate a lease

Negotiate a lease after you’ve found an office that fits your demands and budget. If you engage a broker, he’ll negotiate the conditions for you and make sure you receive the best possible bargain. If you don’t utilize a broker to save money on fees, keep an eye out for conditions like rent escalation and subletting before signing your lease.

For commercial office space, there are three kinds of leases:

• Full-service lease — In a full-service lease, the landlord is responsible for all property expenditures, such as property taxes and insurance, repairs and maintenance, utilities, and cleaning services. This is the most popular and best sort of commercial lease for the tenant.
• A net lease is a leasing arrangement in which the landlord charges a lower yearly rent than a full-service lease but includes monthly “ordinary expenditures” such as property taxes, insurance, and common area maintenance (CAM) fees.
• Modified gross lease — A modified gross lease requires a tenant to pay their share of property taxes, insurance, and CAM fees in one lump payment along with their rent. This implies that the rent on a modified gross lease is set in stone, with no hidden fees or levies.

Negotiating your lease

Base rent, lease length, rent escalation, and tenant improvements are all common features in commercial leases. Make sure you know how much you’ll have to pay in rent each year, how long you’ll be able to use the space, and what your landlord will be liable for under the lease. Before signing a lease, familiarize yourself with the following critical concerns.

When negotiating your lease, keep the following in mind:

Base Rent

The amount of rent you’ll have to pay each month for useable space is known as base rent, and it’s expressed as a cost per square foot each year. Usable space, which is the area your office actually utilizes for operations, and rentable square feet, which includes your company’s portion of common space inside the building, may be included in this value. Consider the rentable square feet before committing to a base rent when negotiating an office lease.

Length of time

The normal length of a commercial lease is three to 10 years. Check to see whether your lease requires you to remain longer than you want. Alternatively, if you want a longer lease time, make sure the space is yours for as long as you need it.

Credits for Tenant Improvement

If you need to renovate an office before you can start doing business, make sure the lease includes tenant improvement credits to pay the costs. These credits allow a tenant to perform essential leasehold improvements at the landlord’s cost.

Rent and Rent Increases

Your office contract will specify any potential rent escalations in addition to providing the monthly and yearly rates. A landlord may lawfully raise the rent throughout the lease by putting such a provision in the contract. Three percent annual rent increases are very frequent, so check sure your agreement doesn’t include an unusually high proportion.

When renting office space for a small company, you should avoid many boilerplate contract conditions in addition to making sure the lease matches your requirements. The landlord may have the power to cancel your lease at any time without reason, as well as the ability to pass on building maintenance fees. When negotiating your office lease, keep an eye out for red signals like these.

Clause of Use

A use clause specifies the kind of businesses that are permitted to operate in a certain commercial location. A lease, for example, may restrict the use of a space or building for retail or office purposes. Before you sign your lease, double-check that the building’s usage isn’t limited in any manner that may hinder your capacity to run your firm. Negotiate as wide a usage clause as feasible since it may affect your ability to transfer the lease to another firm.

Without Cause Termination

To preserve flexibility in their operations, landlords may reserve the right to cancel your lease without reason. If your landlord decides to utilize this privilege and forces you to leave before your lease is up, it may be tremendously damaging to your company.

Transfer Restrictions

A lease must be assignable, much like a residential lease, in order for a tenant to sublet or otherwise transfer the office throughout the lease duration. Make sure the lease permits for assignment and subletting if you want to leave the facility before your lease expires or if you plan to sell your company while the lease is still in effect.

Taxes on real estate have risen.

In most business leases, the landlord is responsible for paying the space’s property taxes. If you rent an office, however, you may be accountable for any increases in property taxes since the contract was signed. If you’re concerned about this prospective rise, check your lease for wording saying that you’ll be liable for any property tax hikes during the lease time.

Clauses that apply “as is”

An as-is provision in a lease aims to absolve the landlord of his responsibility to repair or enhance the rented premises. This provision states that the tenant will accept and occupy the building in its current state—as it was at the time of the lease—and that the landlord is not bound to upgrade or repair the premises. You should reject this wording if at all feasible, even if it allows you the right to examine the property prior to signing the lease.

Avoid These Mistakes When Renting Office Space

Choosing an office space is a big business choice with a lot of pitfalls. Businesses often lease new office space only to discover that it is either too pricey, too tiny, or otherwise unsuitable for their requirements. Keep an eye out for the usual blunders companies make when choosing an office space while determining your company’s optimal location.

The following are mistakes to avoid when renting office space for a small business:

Excessive Spending

When leasing an office, agreeing to a hefty monthly payment and overextending your firm is a significant error. You risk jeopardizing your company’s long-term profitability or going out of business if you lease an office that does not fit carefully within your overhead budget. Before you start searching for offices, set a cautious budget and stick to it. Don’t get caught up in flashy facilities you can’t afford.

Not Getting Big Enough

It’s critical to think about your company’s long-term demands while picking an office. Although it’s hard to predict where your company will be in one, three, or five years, you should think about your firm’s objectives when you look for an office. Then, if you go on a tour of a place, consider how you might fit in if your company’s development paralleled or even exceeded those objectives.

Choosing an Inappropriate Location

Before signing an office lease, educate yourself about the neighboring areas and transit choices. Focus on your present client base’s preferences, but don’t forget about your target market’s overall regional demands. Before deciding on an office site, spend time investigating nearby companies, local services, and more.

Important Lease Terms Are Missing

A lease is a legally binding agreement between a landlord and the company that will be renting office space. Many lease clauses favor landlords and, if disregarded, may have significant financial ramifications for a small firm. Use restrictions, transfer limits, as-is clauses, and other lease provisions that might cost your company money and limit flexibility should be avoided.

The Benefits and Drawbacks of Renting Office Space for a Small Business

There are various advantages and disadvantages to renting office space for a small company, depending on your requirements. While leasing an office is less expensive than buying one, it does not generate value in the property and leaves you vulnerable to your landlord’s activities. Before signing on the dotted line, familiarize yourself with the benefits and drawbacks of leasing.

The Benefits

The following are some of the advantages of renting office space for a small business:

• Less costly than buying — Rather than owning a facility, leasing office space may help your small company save money on overhead costs. Your lease payment might be cheaper than a mortgage monthly, and you won’t have to worry about taxes or insurance.
• Lower maintenance — When you lease rather than own office space, you are not responsible for the building’s upkeep. You will save time, money, and energy by not having to maintain your own building.
• More possibilities — Depending on your market, renting office space for small businesses may be a better option than owning. If you’re in a seller’s market, renting office space may be a viable option until the market shifts in your favor.

Disadvantages

The following are some of the disadvantages of renting office space for a small business:

• Less adaptable – When you sign a lease, you’re committed to the same office space for the duration of the contract. This limits your freedom to move locations to match your company’s changing demands.
• Leasing an office is still pricey — Depending on your market and your company’s demands, leasing an office may still be out of reach.
• There is no equity in the building — While leasing an office might be less costly than buying one, the money you spend each month isn’t a long-term investment.
• Unstable – As a tenant, you’re generally at the mercy of your landlord, who also happens to be the building’s owner. Your landlord may sell your office building to someone else or make other changes to the property during your lease term, depending on the conditions of your lease.

Bottom Line

You should know your company’s requirements, finances, and development objectives before renting an office. To find properties, organize walk-throughs, and negotiate a reasonable lease, we suggest using a registered commercial broker. You may, however, do your own research utilizing a tool like LoopNet.

Remember to double-check that the office space you’re considering provides dependable internet and networking services.

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