Choosing an office space is an exciting and critical step forward in your business. Besides portraying your brand image and company culture, your office space also affects your staff’s morale, productivity, and daily operations.
Having a beautifully designed office space that reflects your company culture ensures your employees love the work environment and enjoy working there.
They’ll likely be healthier, happier, more productive, and engaged. A well-maintained office space leads to higher employee satisfaction, lower churn rates, and fewer sick-days.
You must consider some essential factors when looking for a new office space or upgrading your offices. Let’s discuss these key factors to ensure your choice empowers your team to socialize, learn, collaborate, and focus for better business performance.
Size of the Office Space
If you’re wondering what to look for when renting an office space, you should start by considering your business’s current and future needs.
You need to ensure that you have enough room for everyone who works in the office and any additional equipment or furniture that may be necessary.
Calculating the square footage of an area will help determine how much space you will require so that all employees can work comfortably without feeling cramped. As a rule of thumb, every person should have about 70 square feet. However, this can increase if your team requires additional storage or bigger desks.
Additionally, consider what features your business might need, such as a kitchenette for coffee breaks or a conference room for client meetings. You can ask yourself these simple questions to help you determine whether you have the right size:
- Will the floor space accommodate enough space for each individual ?
- Will employees be happy with the recreation or social space?
- Will the space be enough for a dedicated meeting space for clients?
- Will I have space to accommodate growing staffing numbers depending on the growth projections?
These are essential components of any office, and you must consider them before renting or leasing a workspace.
Location of the Office Space
When considering the location of your office space, accessibility should be at the top of your office space checklist. This includes how easily employees can get to and from the area and any public transportation options that may be available for those who do not have access to a car.
You should also take into account the security of the building or complex that hosts your workplace. Ensure there are sufficient locks on doors and windows, so employees feel safe when going in and out of work each day.
If possible, research any crime statistics near potential locations to ensure your business remains secure at all times. Remember to look into nearby amenities such as restaurants or shopping centers so your employees can enjoy places outside work hours if desired.
Price
When considering office space, it is essential to consider whether the price is within your budget while comparing renting versus buying.
If you choose cheaper options, there’s a risk that the space will fall short of what you need, forcing you to relocate within a few months. However, if the space is too expensive, your business may struggle to keep up with rent, forcing you to downsize or move.
To help you strike a balance on the amount you spend on your office space, ask yourself these questions:
- Does the pricing of the potential office align with other similar spaces near the locations?
- Are there any hidden costs like parking and maintenance fees?
- Does the current financial status allow me to pay three months rent deposit?
Renting may be more cost-effective in the short term, but you should also consider long-term costs and whether purchasing a property would benefit your business.
Several pricing options are available when renting an office space, such as monthly rent or signing a long-term lease agreement.
Be sure to weigh all of these options carefully before making any commitments so that you can find the most suitable choice for your budget and business needs. Furthermore, remember to factor in additional expenses such as utilities and internet access when calculating rental costs since these will add up over time.
Type of Lease Agreement
When it comes to signing a lease agreement, several different options are available. The most common type of leasing is “net” or “gross,” which refers to how much of the rent is due upfront and how much you will pay over time.
Another option is “triple net,” where both parties agree that the tenant pays their taxes, insurance, maintenance costs, and rent payments. Additionally, some landlords may offer month-to-month leases for those who prefer more flexible arrangements.
Your lease agreement should ideally align with your long-term business goals and plans.
Components of a Commercial Lease Agreement
A commercial lease agreement is only enforceable and valid if it contains certain key information and elements. The most basic arrangement should include the following:
- The lease duration
- Security deposit amount
- Information about the rent
- Any additional costs you’ll incur as the tenant
Ensure you carefully review the additional costs before signing the agreement. Costs that fall under this category can be such as:
- Maintenance costs
- Property taxes
- Building insurance
As a business owner, you should also know the difference between permitted and exclusive use. If your business is competitive, you’ll benefit more from an exclusive-use contract.
Such a contract prevents similar businesses from renting in the same space, lowering the chances of competing for sales.
Standard Terms in Commercial Leases Agreements
As a small business owner, commercial lease agreements can be confusing if you don’t understand the jargon. Here are some standard terms you may come across in your lease agreement:
Base Rent or Rent Amount
The base rent depends on the office space’s square footage. Confirming that the number the landlord indicates represents the usable space is essential.
Usable Square Feet
This term refers to the space the landlord reserves for your business in buildings with shared spaces.
Rent Increase
Rent increases can change annually, and the amount is typically a certain percentage of the total rent. Before signing the agreement, you can negotiate or discuss with the landlord to set a cap on the increases.
Security Deposit
The security deposit refers to the amount you’ll pay to book the space the property manager finalizes on the proper documentation. This amount should be clear before and after signing the lease agreement.
Length or Duration of the Lease
The duration of a commercial lease typically ranges from three to five years. Unlike residential leases, commercial landlords opt for longer lease terms. Your lease agreement should specify the day the lease starts and when it ends.
Improvements
This section in a commercial lease agreement specifies the upgrades or improvements necessary for the space and who should cover the costs. Most aspects in this section are not set-in-stone, so it’s a good idea to negotiate with your landlord before signing the lease.
Grant of Lease
This section stipulates that the landlord will allow you access to the premises once you fulfill all the required conditions, such as submitting the security deposit. If the conditions are acceptable for both parties, the landlord can hand over the property to you.
Commencement Date
This date represents the actual date when you take responsibility for the office space. It’s the day when maintaining the rental space and rent payments become your duty.
Extension
This section outlines whether the landlord can allow you an extension of the agreement. The agreement should be in writing in such a case, and both parties must sign the document.
Late Fees
If you’re late on your rent payment, you may incur an additional fee specified in this section of your commercial lease agreements. This can be a percentage of your monthly rent or a flat fee.
Taxes
This part of the lease agreement outlines the taxes linked to the property, like real estate and property taxes, and whose responsibility it is to pay them.
This section can have subtopics, such as:
- Change in method of taxation
- Payment of ordinance assessments- As a tenant, you’re responsible for the costs of all ordinary obligatory evaluations, but the special reviews are optional.
- Contest of Taxes – This clause allows you to contest the amount of real estate or personal tax you must pay.
- Obligation for Repair
This part of the lease agreement specifies the type of repairs that are the landlord’s responsibility and obligation, such as material deviations, failures, deficiencies, or defects. Such repairs are crucial to the property’s optimum function.
This section also outlines the repairs that are your responsibility.
Permits
If you intend to make major repairs or upgrades in the office space you’re renting, you need to work with the landlord to get all the necessary licenses and permits.
Covenants
These terms differ for the landlord and tenant, so each party has a different set of covenants. For instance, a covenant on your agreement can state that you must pay rent even in the property manager or landlord doesn’t honor some of the responsibilities outlined in the lease agreement.
Indemnity by Tenant
This clause excludes the landlord from all liability in case of damages, claims, loss, or injury in your office space. The landlord is only liable if these occurrences directly result from their gross negligence, omissions, or actions.
Rent Adjustment or Abatement
This section specifies that your landlord should eliminate or adjust your rent in case of property damage due to a natural disaster or fire.
Condemnation
Although most people overlook this section, it’s vital to your lease agreement. It outlines the next course of action if a government agency takes over the rental property from your landlord for public usage, either by eminent domain or condemnation.
Option to Purchase
This clause stipulates that you, as the tenant, have a right to purchase the space at an agreed-upon price at any point before the lease elapses. It’s not a mandatory clause, but having this option is a good idea, especially if you plan to expand your business. This clause can also specify that you have no right to buy the property during the lease term. Whichever the case, it doesn’t hurt to have it in writing.
Before signing any lease agreement, it is essential to consider all possible aspects carefully so that you don’t get into a situation you can’t handle financially or legally later on.
- Take into account factors like when payment deadlines fall and what happens if you fail to meet them on time.
- Understand what rights each party has during termination
- Look at ways out should either party decide they need to break the contract early on
- Find out who’s responsible for repairing damages if anything goes wrong within the office space
- Make sure everything agreed upon verbally gets written down clearly in black and white
By considering all these things before signing your lease agreement, you can ensure that both parties have a fair understanding of what to expect throughout your tenancy period.
Condition of the Office Space
Office spaces are available in various conditions to accommodate different business needs. Some spaces come as fully-designed units, while others come as “white box” shells, allowing more design flexibility.
Let’s look at each type to help you determine the best one based on your budget and needs.
Shell Spaces
These basic spaces include an overhead roof, windows and ventilation, floors, and walls. Such spaces are an excellent choice if you desire complete control over the design and furnishing.
Since most shell spaces are new builds, you may or may not get pre-installed plumbing, electrical, and HVAC systems. Since any improvements you make are likely permanent, most property owners offer more money for the upgrades.
We call these funds tenant improvement allowances (TIs).
Second-generation Spaces
2nd gen spaces come with some modifications made by previous occupants. Although you can customize the space to some degree, you won’t have the same design flexibility as with a shell space.
The upside to second-generation spaces is that you can settle in faster. However, property owners offer less TI allowances, so you’ll have to pay for most improvements.
Spec Spaces
Spec spaces are fully designed and ready for immediate occupation. The property owner pre-designs the spaces based on how they anticipate the tenant’s needs.
Since the spec spaces come fully furnished, there’s little or no need for renovations.
When assessing the condition, your office space checklist should focus on ensuring the space meets all safety regulations.
This means checking the area for potential hazards, such as exposed electrical wiring or slippery floors, and ensuring the landlord addresses them before anyone starts working in the space.
Fire extinguishers should be strategically located throughout the building so employees can quickly access them in an emergency. Additionally, ensure that any equipment used within the office is up-to-date with current safety standards and regularly inspected for proper operation.
It is also essential to consider comfort and appearance when evaluating a workspace. An uncomfortable work environment can lessen employee productivity due to fatigue or distraction from their tasks.
Therefore, consider factors like sufficient lighting and ventilation and furniture arrangements that promote collaboration while providing ample personal workspace for each staff member.
Aesthetics also influence how people perceive a business, so check out how colors interact, along with decorations such as artwork or plants. Such decorations can add life to any room without taking away from its functionality.
Considering these aspects when choosing an office space will help create a productive atmosphere where everyone feels comfortable doing their best daily work.
Availability of Parking Spaces
When finding a suitable office space, your office space checklist should include the availability of parking spaces.
As such, you must inspect the parking lot before renting or purchasing an office to determine how many spots are available and if they suit your team and business needs.
It would be best to look into additional parking options nearby so employees have more options when coming in and out of work each day.
Another vital aspect to consider when inspecting the lot is its condition. Check for cracks or potholes on the ground and any potential hazards, such as broken glass, which could cause injury if someone were to step on them without realizing it.
You should also take note of how much lighting there is around the area at night, along with any surveillance systems installed for additional security against theft or vandalism.
Finally, find out about pricing options for renting versus buying since this will significantly affect your decision-making process regarding locating your office space. Try negotiating a discounted rate with landlords who offer monthly leases so that you don’t end up paying too much upfront while still getting ample time to decide whether or not this location works best for your business’s needs.
Conclusion
In conclusion, finding the right office space for your business requires careful consideration of various factors such as location, size, amenities, and budget. It’s crucial to take the time to research and visit different spaces to ensure you find one that aligns with your business goals and culture.
Remember that your office space is not just a physical location but an extension of your brand and can impact your productivity, employee morale, and client perception. By following the tips outlined in this article, you’ll be on your way to finding the perfect office space for your growing business