3 Questions You Should Ask About Your Kansas City Office Space Lease
Renting commercial real estate can be a more complicated process than one might think. With markets varying based on location, outdated terminology, and very little regulation, the process can be confusing for a business looking for a good deal. Here are a few big questions you should be asking throughout the leasing process in order to come out with the best deal possible, as suggested in the article “3 Things You May Not Know About Commercial Real Estate”:
Are there any hidden fees?
Leases can turn out to be riddled with hidden costs if you are not a careful reader and negotiator. One major source of unexpected expenses is Common Area Maintenance costs (CAM). While this is a typical expense you should expect when signing a lease, be aware that the landlord can put a variety of different expenses into this category. For example, landlords have to pay property management or asset management fees, but sometimes they can pass this cost onto the tenant through CAM charges.
Know that a lot of costs are unavoidable, but it is important to know the exacta amount you are paying, what that money is going to, and whether you are being asked to pay a fair percentage of those costs. Don’t be afraid to clarify and negotiate these kinds of terms.
What is my real square footage?
Square footage, which describes the size and boundaries of an office space, seems like it would be a standard measurement, but there are actually varying ways that square footage is calculated; different markets have different ways of measuring property in terms of what they include and exclude in their measurement of a space. For example, some measurements might include things like wall cavities or pillars – spaces that you really cannot use.
To avoid paying significantly more rent for space that is unusable, make sure you first clarify with your landlord what exactly the listed square footage includes, and then make sure that you visit the space yourself to check and see that there are not a multitude of awkward, unusable areas that you are being charged for. You might even consider bringing in someone to measure the space for you to make sure everything matches up.
Can I get any financial help to improve a space?
If you know that you need to make some changes or improvements to a space, a big question is where you are going to get the money to do that. You might be able to negotiate for a tenant improvement (TI) package from your landlord, which is money that the landlord puts toward the improvement of the space. This privilege is usually reserved for tents signing a long-term lease, and landlords might really emphasize this benefit to compete with other spaces you are looking at.
However, it is important to closely examine where exactly this improvement money is coming from. Know that most likely the landlord is actually building these improvement costs into your rent in the long run – sometimes even with an interest rate as high as 10%. This can be costly in the long run, so make sure you know exactly what you will end up paying. This improvement package can be great if you do not have the cash initially improve the space, but make sure you don’t wind up ultimately paying more than you budgeted for.
Getting a good deal on a commercial real estate space is possible, but it requires some research and careful negotiation. Make sure you are prepared to get the best deal possible for your business!