Ok, so this is a little off-topic from what is usually on my mind but I think it would be helpful to a lot of you. Following piece was written by Dana Epp, fellow Security MVP, on the subject of commercial office space and leasing. Don't you just love it when experts are not just one-dimensional drones? Here we go: — But I would like to comment on your lease negotiations. I have had success with a few of my companies now where I used a 'step-lease' to grow my business. It works like this. You sign a short term contract (say 1 year) where you ask for a step-lease, in which you have periods of time in which the payments grow. Maybe you start out at $500/month in Q1, then $575/month for Q2, $650 for Q3 and $725 for Q4. This gives your business time to adjust for the expenses and allows the property manager to have an expected cashflow. Don't be fooled… Their job is to try to get long term tenants in the building. They will typically work with you if you have achievable goals. Give yourself an out clause. I would typically negotiate a 3 month window. This would mean at any one time, I would have to pay 3 months rent if I decided to close down operations. And if you can, get an option for a second year at the original accepted lease agreement (in your case $750). In this way, they can't hold you hostage when your 1 year term ends. I have heard horror stories of tenants coming up to their last month on a lease and being held hostage by the property manager. You don't want to be in that uncomfortable position… Worrying if you have to move your office, get new letterhead/phone numbers etc. I'd also ask the property manager if you can get the triple-net fees broken down and in writing. It isn't uncommon for "common property" rate hikes (like gas prices rising)… And you can eliminate this risk by ensuring its all in writing. You can't afford to have unknown expenses hit you when you make sure a large overhead investment. As a final note, I would suggest NOT taking on sublet tenants. You have your own business to worry about… Fretting about real estate shouldn't be one of them. You don't want to have to source tenants, collect rent and worry about extra insurance and security to deal with it. If you can't afford this space on your own… find other space. I don't see why you can't find 300sq/ft to meet your needs for a lot less than that. Of course, I don't live in your area to be able to make a judgment call on that one. Get space that works FOR you. Don't become a SLAVE to it. — How's that for some good advice??
Whats on Vlad’s Mind?For the less coherent, more grammatically correct realtime insight, follow me on Twitter at @vladmazek or on Facebook.
2 Responses to Commercial Office Space