Considering leasing commercial office space? To make the best choice for your business, it’s vital to comprehend the full service commercial office leasing process. This guide gives you all the data you need to make an educated decision concerning your office space, from recognizing different types of office spaces to knowing landlord/tenant expectations.
This guide will arm you with the essential data to make an informed decision for your firm, ranging from analyzing the monetary implications of leasing to bargaining with landlords. Get ready to become familiar with the details of commercial office leasing and locate the optimal office space for your company.
What is full service commercial office leasing?
Full service commercial office leasing is the most popular type of office leasing in Florida. A commercial real estate broker manages the entire process, from finding the right office space to helping with payments and lease negotiations. They may also offer tenant improvement assistance, property management services, and furniture placement options.
Types of office spaces
Depending on your company’s needs, there are a variety of different types of office spaces you can choose from. Here are some of the most common types of office spaces:
Administrative office – Also known as a “back office,” an administrative office is where your company’s administrative staff will work. Typically located in a suburban or low-traffic area, administrative offices often have few employees. This type of office space is often leaseable as a portion of a larger building, such as a medical office. Administrative offices typically include things like reception areas and small break-out areas.
Back-end office – This type of office space is typically used for administrative, sales, and marketing staff who need to be within close proximity to the warehouse or manufacturing facilities. Back-end offices typically have easy, expedient access to loading docks or shipping areas.
Break-out office – Break-out offices or “hot-desking,” are smaller offices that are typically shared by different kinds of professionals, such as sales and marketing staff, accountants, and administrative assistants.
Corporate office – This type of office space is typically leased by large companies or organizations with hundreds or even thousands of employees. Corporate offices can be found in both urban and suburban areas.
Creative office – This type of office space is typically leased by companies in the creative industries, such as media and publishing companies, as well as creative agencies and design firms. Creative offices often include things like meeting rooms, phone booths, and sometimes soundproof studios.
Healthcare office – Healthcare offices are typically larger medical offices that are leased by medical providers, such as doctors’ offices, urgent care facilities, and increased demand for healthcare services has driven the market for medical office space to grow by more than 50% since the late 1990s.
Industrial office – This type of office space is typically leased by companies in the warehousing, manufacturing, and distribution industries. Industrial offices often include things like large open floor plans, high ceilings, and easy access to loading docks.
Medical office – This type of office space is typically leased by doctors’ offices, urgent care facilities, physical therapy centers, and diagnostic labs. Medical offices often have large open floor plans, high ceilings, and easy access to loading docks to facilitate the transportation of patients, medical equipment, and supplies.
Mixed use office – This type of office space is typically leased by companies that have a combination of different types of employees, such as doctors’ offices, urgent care facilities, and physical therapy centers.
Remote office – This type of office space is typically leased by companies that want to maintain a low profile or have less foot traffic, but still want to be conveniently located. These offices are often located in industrial areas, but away from commercial noise.
Repurposed office – This type of office space is typically leased by companies that want to create a unique, creative workspace that is not like a traditional office space. Repurposed offices often have lofts, exposed brick, and creative decor themes.
Virtual office – This type of office space is typically leased by companies that want to maintain a low profile and are not likely to have employees coming and going regularly.
Financial considerations
The biggest financial consideration when leasing commercial office space is your lease term. The lease term is the duration of your lease, as well as the date when your lease ends. There are three different types of commercial lease terms:
- Short-term leases – Short-term leases are typically for one year or less, with 90 days being the most common term. Short-term leases are typically used by start-ups with uncertain cash flows and long-term leases are typically used by large companies that have consistent cash flow. Tenants looking for short term leases should consider CoWorking or executive office spaces
- Medium-term leases – Medium-term leases are typically for one to five years, with two to three years being the most common term. Medium-term leases are typically used by companies that are trying to expand but need more flexibility than short-term leases.
- Long-term leases – Long-term leases are typically for five years or more. This type of lease is typically used by large companies that have consistent cash flow and want to minimize their risk of early termination.
Negotiating with landlords
When negotiating with landlords, it is important to consider their goals for leasing the space and how you can help them achieve those goals. Once you understand the objectives of the landlord, you can bargain on lease terms that are beneficial to you and your business.
The most common lease terms are gross leasing (or “gross”) and net leasing (or “net”). Gross leasing means the landlord will take care of all the maintenance costs and property taxes and that you’ll just pay the base lease amount. Net leasing means you’ll be responsible for the maintenance costs, taxes, and any other building-related costs. Depending on the type of landlord and the type of building, you may be able to negotiate the lease terms to net leasing.
Common lease terms
Here are some common lease terms and their definitions:
- Base rent – The base rent is the amount you’ll pay every month for your office space, regardless of how much space you occupy. Base rent is typically calculated as a percentage of the total office space, with the amount increasing as the amount of space increases.
- Percentage rent – Percentage rent is the amount your rent will increase based on the percentage amount of increase in the Consumer Price Index (CPI). Percentage rent is typically used in short- and medium-term leases.
- Modified gross – Modified gross is a lease whereby the base rent is a percentage of the gross rent and the landlord pays for taxes and maintenance costs. Modified gross is typically used in short- and medium-term leases.
- Modified net – Modified net is a lease whereby the base rent is a percentage of the net rent and the lessee pays for taxes and maintenance costs. Modified net is typically used in long-term leases.
Hiring a real estate broker
The process of finding office space can be a challenging and time-consuming one, especially if you’re not familiar with commercial leasing. Since there are so many factors to consider when searching for a commercial lease, it’s important to work with an experienced and licensed broker who can help you make informed decisions about your space needs in Hillsborough, Pinellas or other counties in the greater Tampa Bay Area.
There are three different types of real estate brokers:
Exclusive – Exclusive brokers will only work with you and dedicate their attention to your needs from beginning search to signing of lease. This is the most time-intensive commitment from the agent’s stand point, but assures you have a partner in the process. Both parties make a commitment to each other. It is important for the tenant to make certain that the broker is committed to the assignment and if they are not, there are clauses that allow the tenant to easily exit the arrangement.
Non-exclusive – Non-exclusive brokers will be able to help you find the right property, but their dedication will not be as intense. They will send you deals as they come up. It is a much more casual relationship. There is no commitment from either party. The downside as a tenant is, you cannot expect an agent to be committed to you if you are not committed to them. Agents are paid, afterall, if they assist in consummating a deal. If you are speaking to many different agents there is an increased chance that the agent will not be compensated for their time. Their time and effort will be concentrated on those clients with whom they have an increased likelihood of being compensated for their time.
What are the differences between Rentable Space and Usable Space?
Rentable and usable space are two concepts that are frequently confused, but they are not the same.
Rentable space is the area of a commercial office that can be leased to tenants, whereas usable space is the amount of that space that the tenant can actually use. The difference between the two is typically due to the presence of common areas in a building, such as hallways, restrooms, and elevators, which are shared by all tenants and thus not included in the usable square footage. In some cases, rentable space may also include storage areas or parking spaces that are leased alongside the office space.
