Leasing professional office space will eventually become a necessity for any growing business. That being said, leasing space includes a whole lot more than just showing up, moving in, and paying rent. There are many unforeseen costs that can be easy to miss if you aren’t aware of them. Failure to identify these costs prior to signing off on a lease could set you up for an inevitable hiccup in your business budget. It’s important to remember that no two leases are alike and that different landlords will likely cover different expenses under the lease terms, so reading through your lease carefully and clarifying anything that doesn’t make sense is imperative to the stability of your business’s future. Here are some obvious, as well as some not so obvious, overhead expenses your business needs to be aware of.
Clearly, you will have to pay rent for your professional office space. However, you will need to be aware of how your landlord is determining your rental rate. The type of lease(triple net, gross lease, et cetera) will largely factor in to the expenses which are covered within it. If you are comparing two properties based on the rental rate alone without having this knowledge, you aren’t fully aware of what you are paying for.
CAM, or Common Area Maintenance, is typically an expense that is covered by the landlord in professional office space leases, but that doesn’t mean that this is always the case. CAM refers to garbage disposal, parking lot maintenance, roof maintenance, and other shared functions that keep the building running efficiently.
While your landlord should already be carrying liability insurance on your professional office space, this doesn’t mean that you aren’t required to have it as well. You will need to purchase general liability insurance, as well as personal property insurance to be sufficiently covered in case of any incidents.
Tax costs are typically included in your lease and divided between all of the tenants within a building based on the amount of square footage within the professional office space. They can, however, have an impact on fluctuations in your lease as they change from year to year.
Utilities that you may need to consider when leasing professional office space are things like phone service, internet, cable, electricity, sewage, and water. Although the latter are likely to be included in your monthly rent, this is not a given. Certain landlords may require their tenant’s to set up and pay for their own services. You have to know this in order to give a fair comparison of properties. If, for example, one property does NOT include electricity in the base rent, you will need to factor in approximately $1.50 to $2.00/sq per year in to pay for that additional cost.
Once you’ve found the perfect professional office space, you will need to consider what outside services you may need to employ. This includes things like janitorial or cleaning services, pest control, copy or print services, and payroll services.
Maintenance & Repairs
You will also want to determine which types, if any, of repairs and maintenance to the property are included in your base monthly rent. For example, if the HVAC system blows or a pipe bursts, these can be huge, unexpected costs that, if not prepared for ahead of time, could seriously derail your business budget and affect your bottom line.
This is one of the most commonly overlooked expenditures by those considering a move to a new professional office space. You actually have to get all of your “stuff” from point A to point B. Hiring a moving company is the quickest and most efficient way to accomplish that goal, but it can also be a costly endeavor. Get clear on what you will need moved and how much these services will cost, ahead of time.
Once you’ve signed the lease on your professional office space, there is a strong likelihood that you will need to make some changes to make it fully functional for your particular business needs. You may have the ability to negotiate a stipulation into your lease where the landlord agrees to pay for some of these upgrades, or you may have to foot the bill alone. Get clear on what your vision for the space is and who will be shouldering the financial responsibility for making necessary changes.
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John Milsaps has spent the past decade learning the needs of his clients in the Tampa bay business community. He has worked diligently to create lasting relationships by keeping his clients aware of both the benefits and risks they assume as they make important decisions about their properties and businesses. His depth of knowledge has made him a specialist in the professional office space sector in Tampa and the surrounding areas.Take a look through his database of available properties today and contact him to get your search started!