Why Your Office Rent is More Than Just Rent

Your office rent may be one of the major expenses that your company will make, and it is important to ensure you know what overall office space costs you can expect. There are many factors to be considered in the overall evaluation of your office space, and it is important that you know them because our office rent is more than just rent. One of the major factors is the city where space is, as well as the size of the space. In addition, the cost of office space can vary significantly within a city. Building class, building amenities, and building neighborhood can significantly affect the rent of a building.

Office Space Rental Rates

Rental rates are often calculated by a square foot per year. A quick google search will show the per square rental rate for each office in a city. If you do not know how many square feet you will need for your office, you may do a rough estimate. For example, an employee uses about 100 to 150 square feet per person. Hence, you can calculate the number of employees you have and you can make an estimate of the rent number you need to budget. However, this is only the base rent and there are usually more fees to be paid as a tenant.

It is important to pay attention to clauses in your lease agreement. For instance, some leases make the building’s “rented” area rather than the “rentable” area when calculating the proportion of the direct operating expenses. The implication of this is that the tenant will be responsible for paying operating expenses for the building’s vacant areas.

Additional Rent

Most commercial lease agreements require tenants to pay additional rent. Additional rent in most cases is a percentage that tenant has to pay for the costs and charges incurred to operate the property. These costs can include municipal taxes, insurance premiums, repair and maintenance costs, and common area utility charges. In any given year, these charges change and fluctuate, so your office rent is more than just rent.

This is known as the Net Lease structure. The most common net lease structure is the triple net lease. In triple net leases, tenants are charged a rental rate and then are charged for other building expenses such as common area maintenance (CAM)/operating expenses, real estate taxes, and insurance. In addition, tenants are responsible for paying utilities and janitorial services for their space separately.

You Need A Tenant Rep Broker

A tenant rep is a professional you can always have with you, especially in the leasing process. An experienced broker can help you manage costs while finding innovative ways to negotiate your rent and minimize expenses. The best part about working with a tenant broker is that it’s free to you. Tenant brokers are paid by your landlord. Tenant reps are the leasing industry's equivalent to a buyer's broker on the sale side of the industry. Your office rent may be more than just rent, and having a tenant rep can help you avoid signing the wrong lease.