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.