Leasing office space is a complicated affair that usually requires experienced commercial real estate services to help with the negotiation process. A company and the office lease service they hire to help with the office lease mediation process must carefully consider what is being offered in order to negotiate a good lease. To make an informed leasing decision, the lease must be thoroughly reviewed and a financial analysis performed to help ensure the company commits to the right lease, as most businesses have little experience with these kind of transactions.
The Finances of Office Space Leasing
For a company to get an office space lease that works well for them, it is essential to conduct a financial analysis of the lease. This allows a company to see exactly how much would be paid for leased space and what they would receive in return. With the help of office lease services, a financial lease analysis examines the lease from both tenant and the landlord viewpoints. Such an analysis can identify potential areas for negotiation or where a business may already be receiving the best value for their money. Skilled financial analysis by a commercial real estate service can help a company find ways to negotiate for the best overall end result, whether that is lower rent, more improvements, or something else.
Careful Analysis of Office Space Leases
Whether renewing a lease or negotiating a new one, there are many details that should be carefully analyzed so that a company gets what they need at an affordable rate. Real estate leasing experts acting on behalf of tenants can review base rent, standard improvements, the cost of rent increase, the impact of any caps on rent increases, and if there are any abated or free rental periods. It is crucial for any business to understand such details about landlord contributions for improvements and who pays for what in terms of contracting fees, IT cabling and setup, improvements for ADA compliance, and any other improvements.
Commercial real estate services note that items such as available parking space or cost, electrical and HVAC fees, interest on loans, and other concerns must be factored in when doing a thorough analysis of an office space lease to determine its effectiveness. Every detail about the lease has an effect on its cost and what the tenant gets for that money. Everything in the lease must be considered to determine how cost-effective and functional this space will be for a tenant.
Understanding and Negotiating Occupancy Cost
One important consideration when negotiating any lease is occupancy cost, which can vary depending on certain provisions and lease negotiations. Occupancy cost is determined by looking at the cost of the lease over its term, cash flow, and projected income during that time, which will differ with every lease negotiation. It represents all discounts and expenses during the entire lease period, instead of just at the time the lease is signed; it provides more of a long-term view of the lease. Expert leasing services state that an analysis of lease details is essential in order to understand what occupying a space will cost now as well as in in the future in order to make a truly informed, positive decision.
A lease analysis that includes a financial analysis and determination of occupancy cost is critical. This information lets a company understand what they are paying for and when as well as a determination of what current and future costs will be. The economics of commercial leasing play an essential role in making informed lease decisions and is something best accomplished by working with experienced office lease services. Commercial real estate services familiar with the challenges of leasing office space are a valuable ally. They can help businesses find the space they need at an affordable lease rate!