8 Ways to Reduce Costs when Finding an Office Space
Reducing cost when it comes to office space is essential for many businesses and companies. After all, real estate costs can rank as high as second or third on the list of a company’s highest expenditures. The following tips are proactive techniques businesses can use during the earliest stages of finding office space to help reduce costs.
- Don’t hesitate to heighten the stakes during negotiations: Creating a sense of competition between potential landlords is an essential part of negotiating a new lease or re-negotiating an old one. Businesses looking to have an advantage in negotiations should make it clear that they are looking at multiple spaces. Revealing too much information is not necessary and, in fact, can be detrimental. Simply revealing that there are other options on the table will suffice.
- Tailor a space to your needs: When looking for a new space, it is crucial for businesses to get not only the right amount of square footage, but also the right layout within a given square footage. One 5,000-square foot space is not necessarily the same as another 5,000-square foot space, as varying layouts and different common areas can greatly affect a space’s usability. Work with a space planner before beginning a search to determine the ideal size and layout for your company’s needs.
- Give yourself sufficient time: Smaller-scale tenants should have a 6-month buffer between beginning a search and moving. Medium-sized tenants should start prepping for a move as many as 12 to 18 months ahead of time. For large-scale, corporate entities with hundreds of employees, prep time should begin as early as two to three years before a move.
- Make sure you factor in construction and build-outs: Pay careful mind to any build-out costs or construction overhead that will factor into the bottom line of a move. Many tenants run into financial surprises when they forget to consider design issues such as build-out costs and do not make the effort to gather competitive bids for any construction needs associated with relocation.
- Consider the entire concession package: While the monthly rental rate is tremendously important, it is also important to consider the entire concession package when making a decision on a location. Issues such as build-out allowances, rent abatements, or relocation allowances can make a big difference in the long run.
- Be sure that you have adequate representation: Don’t rely on in-house services (such as an architect) offered by a Landlord. Assemble your own team of professionals and consultants to advise you during the evaluation process. Brokers, architects, and contractors should all be on your side and working with your best interests at heart.
- Pay attention to the specifics of the renewal option and the sublease provision: Even though the renewal option will not be a concern in the short term, it is still financially beneficial and important to consider it during the evaluation process. Factors such as notification periods and rent penalties can affect a bottom line big time in due course. Paying special mind to the sublease provision can also enhance the marketability of a space if business conditions require subletting a section of your square footage.
- Try to build room for adjustment into a lease: While many leases are long term, business conditions can vary greatly from one quarter to the next. Having some flexibility built into a lease may just be a saving grace in tough times. You also want to mitigate your losses in any worst case scenarios such as interruption of services, natural disasters, or building condemnation.