commercial space for rent kansas city

4 Financial Terms You Need to Know When Leasing Kansas Office Space for Rent

Rent is not the only expense you have to plan for when signing a lease for commercial property in Overland Park, KS. There are a lot of different hidden costs and fees associated with a space, so make a list of questions to ask before you actually start looking at office spaces for rent in Overland Park, KS. Here are a few terms to be familiar with that can help you avoid being blindsided by major financial consequences down the line, as defined in the article “Three Things to Keep in Mind with Your Commercial Lease”:

Commercial Rent – This is the rental rate you will find on a listing. You will want to double check this when you visit a space to make sure that the square footage listed is actually usable square footage.
Effective Rent – This is the actual rate you will end up paying during your tenancy and includes factors like tenant improvement allowances, concessions, and escalations over the years. All of these things vary greatly by landlord and property, so you need to get an idea of what these are before truly being able to compare spaces. A commercial real estate broker can help you understand what is common for different markets, so they can be a valuable resource in determining the true bottom line rental rate of a space.
Escalation – This is the increase in rent per square footage your business could be charged after your base year of the lease (usually your first full year).
Expense stop – This is the means of determining escalation; the expense stop is the amount that the landlord pays towards operating costs of the building, and anything beyond that will be charged to the tenant in the form of escalation following the base year.
Tenant Improvement Allowances – This is the amount a landlord might allocate for major improvements to a space, which are becoming more popular in the era of creative zones, cafes, and collaboration rooms. As you’re thinking about your TI, make sure you think about whether you or the landlord ultimately has ownership of the improvements. Don’t invest so much in your space that you are at a disadvantage when lease renewal negotiations come, or negotiate upfront a lease structure that will allow you to best take advantage of these improvements.

Being aware of all of these financial factors is a crucial prerequisite to signing a lease. Not only do you need to make sure that your business has the budget for a particular space, but knowing these different variables will help you more accurately compare spaces to get the best deal possible.

Working with a broker can really help you understand these costs in commercial space for rent in Kansas City, particularly how the market in a certain area affects them. Make sure that the broker you are working with is actually working for you and is not representing the best interests of the landlord.

If your business is interested in looking at Kansas office space for rent, give us a call at 913-685-4100 to find out more about or affordable office space for lease in Overland Park.

7 Things to Consider Before Leasing Kansas Office Space for Rent

There are a lot of factors that go into leasing a new office space for your business. It is tempting to think about just your immediate need for a new space, especially if you are getting cramped in your current one, but it pays in the long run to think about a variety of factors. Before signing a lease for an office space for rent in Overland Park, here are a few things to think about, as suggested in the article “10 Questions to Ask Yourself Before Choosing an Office Space”:

#1 Long Term Needs

Especially if you are a new business, you want to consider the long-term growth of your company and what your needs might be down the line. If your company can afford it, you might consider renting a little extra space – which would put some pressure on you to work hard to fill it. You can also try to negotiate for shorter lease terms with options to renew, or ask your landlord about first rights to renting a nearby space if it becomes vacant and your business needs to expand.

#2 Location of the Office Space for Lease in Overland Park

This is key in any real estate decision.You want to make sure that your new location will still draw your clients or customers – or that there is plenty of potential for a new client/customer base. For example, your business might be getting a deal by moving to the suburbs, but will this be cancelled out by a loss of clients?

Another aspect of location to consider is the effect on your employees. If your new location will necessitate a long or expensive commute for them, you might be in danger of losing employees. Consult with key staff members before making this decision so that you know where everybody stands.

#3 Finances

Before you even consider renting a space, make sure your ducks are in a row in terms of budget. Particularly if you are a new company, a potential landlord will most likely want to see tax returns, financial references, bank statements, and possibly rent upfront or a bank letter of credit. You will also need to pay a security deposit and maybe even offer a guarantee. Some small businesses need to have owners offer a personal guarantee, but try to avoid this at all costs, as you will then be personally liable if your business can no longer afford the space.

#4 Right Atmosphere

Not only do you want to make sure you are in the right location for your clients, but also that the design of the space itself sends the right message. If your space looks too expensive, clients might be wondering about what their money is really going to, but on the other hand, if your space looks too cheap or dingy, clients might be concerned about whether your business is financially stable.

#5 Accessibility

Does the building have enough parking? What is the cost of parking to customers and employees? Think about how convenient it will be for both customers and employees to park, and try to do things like validate customer parking tickets or get special parking rates for employees. If parking is too much of a hassle, you run the risk of losing both clients and customers.

Also make sure that the building is up to the standards of the Americans with Disabilities Act. If a building isn’t currently in compliance, this could be a huge expense to your company down the line.

#6 Lease Ownership

Make sure you know exactly what will happen in the event that you want to sell your company or move to a different space. Some leases will hold previous owners liable even if they are no longer in the space, so make sure your lease is clear about this, and talk about the possibility of an assignment clause or subleasing.

#7 Lease and Rental Rate Security

Even if you aren’t sure what your business will look like in a few years, you want to negotiate thinking as long term as possible. It would be terrible to get settled into a space for a few years, only to find that the landlord is ready to rent to someone else. If possible, negotiate for options to renew, as well as put a cap on rent increases (for example, no more than 5%).

From looking at potential spaces, to preparing your company, to negotiating the lease itself, there is a lot of legwork that goes into acquiring a new Kansas office space for rent for your company. Do your homework upfront and make sure you know what you are getting yourself into before making any big decisions.

It might also be helpful to work with a tenant broker – there are even some that work with startups specifically – because this person can help you navigate the nuances of the commercial real estate market and lease negotiation.

If your business is interested in office spaces for rent in Overland Park, KS, give us a call at 913-685-4100 to find out more about our commercial space for rent in Kansas City.

Commercial Office Space for Rent in Overland Park, KS: A Guide to Brokers and Leases

Knowing something about what to expect from brokers and leases can help your business get a better deal on a commercial office space for rent in Overland Park, KS.

Using a Broker to Find Commercial Property for Lease in Overland Park, KS

A lot of new businesses wonder whether it would be beneficial to work with the broker to find an office space. If you’ve rented residential property before, don’t make the mistake of thinking this is the same as commercial property. The commercial real estate market can be much more difficult to navigate. There are so many more factors to consider when dealing with commercial real estate, such as zoning restrictions. An experienced broker will be able to guide you through these nuances.

But brokers can be a little tricky because typically their commission is paid by landlord, so it’s important to know that the landlord’s interests might be their priority. Here are a few things to be aware of if you do choose to work with a broker:

Commission – not only does the landlord pay the broker’s commission, but the commission is actually based on a percentage of what you pay for the lease, so brokers will try to show you the most expensive spaces.
Negotiations – it is not part of a broker’s job to help you negotiate the best deal for a lease, so they will most likely not point out any problematic parts of the lease or areas where you could ask for better provisions.
Attention – again, brokers are generally motivated by how much the lease will cost, so if you’re looking for a smaller lease, you might get less attention from a broker.

That said, if you’re aware of the downsides of working with the broker going into the process, you can be on the lookout for these pitfalls, but still enjoy the benefits of working with someone who knows the commercial real estate market. You might also want to consider working with a real estate attorney so that you have someone on your team who actually does represent your interests.

Finding the Right Broker

If you can, try finding a tenant broker, which is a type of broker who focuses on working with potential lessees. To find a good broker, you can ask your real estate attorney to recommend someone, or you can ask for referrals from other business owners who’ve successfully worked with brokers. If your business is located a in smaller town where you don’t have the option of working with the broker, then you can use public tax records to find contact information for commercial property owners and contact them yourself.

Be aware of brokers who might want you to sign a representation agreement, which means that they had exclusive rights to show the property to you. This can be a good thing if you’re a smaller business, as it means the broker has more incentive to find you a good space. However, larger businesses renting spaces that will have a lot of commission might not want to limit themselves with the representation agreement.

Types of Office Space Leases in Overland Park

There are few types of leases you might run across:

Percentage Leases – these are most common for retail spaces, and involved paying a base rental rates plus a percentage of your sales.
Net leases – for these, you pay a certain price per square foot, plus some or all of the costs of running the property. For A double net lease, you pay taxes and insurance, and for a triple net lease you pay taxes, insurance, and maintenance.
Gross leases – for this lease, all costs are included in the price per square-foot.

What is Included in a Lease for Commercial Space for Rent in Kansas City?

Not all leases look the same, but there are a few common elements that you will want to discuss with your landlord.

Lease length – while landlords typically prefer longer leases, tenants want shorter leases with options to renew so that they’re not on the hook for a space that they cannot afford or have outgrown. If you feel like your business is stable enough for a longer lease, this can give you more negotiating leverage with the landlord.
Subleasing or assignment clauses – this is a good option if you have to leave your space before the lease is over and want to avoid paying a penalty. Subleasing clauses are more common, and they allow you to rent the space to a new tenant even though the lease is still in your name. Assignment means that you can transfer the lease over to a new owner, but this is less common in commercial leases.
Build outs – if you want to make any changes or improvements to the space, you need to make sure that this is included in your lease and clarify who is paying for these alterations.

These are just a few of the common elements of commercial leases. Before you start the process of working with a broker and finding a lease, prepare yourself by doing a little research on renting commercial real estate so that you know what to expect.

If your business is interested in office space for rent in Overland Park, give us a call at 913-685-4100 for more information about our available spaces.