Ever feel like you’re boxing in the dark when you’re trying to figure out the real costs of the office space you rent?
Because different types of real estate charge differently for space, it can be a challenge!
Generally, retail or industrial buildings charge a base rent plus taxes, maintenance, and utilities. The chargers can be all over the map, so don’t assume one building has the same net charges as the one next door.
Office spaces usually offer what are called Gross Leases. This means that the tenant pays only the rent per square foot – no other charges – but the square foot rates and conditions vary by region and state.
In Michigan, for example, a gross lease usually means the tenant pays the base rent plus a percentage increase over the base year, plus electric. In New York the gross rate is factored by a completely different formula.
Whenever I prepare a request for lease proposal, I always ask for a written definition of the true cost, and what is included in the gross rate. Without that information, it’s like boxing in the dark because you never knows what is going to hit you next.
Come to the bargaining arena prepared to shed a lot of light!
Image from Unsplash by Matheus Ferrero