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How to Find the BEST Deals on Office, Warehouse, Industrial, Retail, and Commercial Space for Rent o

As a leasing agent for JGM Properties, most of the startup businesses I encounter are often hesitant to move into a new office space. People tend to think they are saving a significant amount of money working from home. They are under the impression that office space is too costly for their small operation and are afraid of making any long-term commitments.

By Eli J. Russell

Flexibility Leads to Affordable Office

If You Help the Landlord Help You, Both Can Benefit.

Many startup businesses begin their journey in the affordable and comfortable confines of home. Before they know it, these businesses out grow home base and need to replant their operation in a more formal setting.

Flexibility Rewarded

Flexibility is essential if you want to find great deals that meet your unique startup needs. If you are considering a move to commercial office space, the best advice I can give is to be flexible in your needs and look for landlords who are flexible in regards to term, price, and overall service.

Often an entrepreneur's need for flexible lease terms will dictate their decisions. When I talk with them, their biggest fears are that of survival and of managing their growth, which is why they don't want to get locked into a lease. If your business hits a bump in the road and you have to scale back expenses quickly, you don't want to be stuck with lease payments for the next three years.

Conversely, if your business starts to grow faster than expected, you don't want to be trapped in a space that is too small. For these reasons, prospective tenants prefer minimum leases of six months to one year – terms which most landlords shy away from.

Working with startup businesses has taught me the value of developing ideas that are different and unusual. I noticed that when I started getting creative, new businesses became interested. Most importantly, I am committed to meeting the needs of every tenant, so in the end we can work together and come to an agreement. If my tenants need to expand I'm delighted and make every effort to provide them with new space. On the other hand, if they need to end a contract or shrink their operation, I assist them in this process as well. In my line of work, it is crucial to develop longterm mutually beneficial relationships. I would recommend finding a landlord who will treat you in such a manner.

Watch for Deals

Recently I met a gentleman who needed a flexible deal; I had a 734 foot space sitting empty. Consequently, we agreed that he would pay $375 a month, on a month-tomonth basis, while the space was still actively marketed. In return if a lease-signing tenant was found, the gentleman agreed to move to another office in the building or to one of our nearby buildings. He also got the right-of-first-refusal in case he wanted to stay put.

Part of my job is to listen to the needs of new tenants. I heard they had a strong desire for low-cost solutions, so I developed a standard package that offers 200 square feet for only $300 a month. The property has a café, free Wi-Fi, conference rooms, garage parking and an exercise facility. The price of $300 per month includes everything, except for phone service.

Ask Questions

Prospective tenants often rely on me, as an agent, to take the lead, handle most of the process and answer all of the questions. Sometimes they even look to me for advice about marketing their business. Overall, they are looking for a full-service package, not just someone to show them space and get a signed contract.

Never be shy about asking questions. Landlords who work with new businesses recognize that as a general rule, startups need more attention and support. They should welcome your curiosity and desire to know how leasing works.

For instance, a common question I get is about calculating monthly rent. Simply take the cost per square foot and multiply it by the number of square feet, and then divide by 12. Example: $16 per square foot x 700 square feet = $11,200 annually. Then simply divide that by 12 to get the monthly cost of $933.00.

You should also know the difference between net rent and gross rent. Net rent is just the base rent of the physical space you will occupy, plus your share of the common space, such as hallways, conference rooms that all tenants use (net rates are not inclusive). Gross rent is an inclusive price that usually covers everything except phone and internet service.

Generally, the average tenant's monthly cost will include the base rent, plus utilities, property taxes and operating expenses. It is best to ask for the gross rent (which is the total cost), so you won't get any surprises. Otherwise, an attractive $9 per square foot rent could quickly grow to $16. It is better to ask up front rather than find out after you have driven across town to see space you can't afford.

Of course the terms of your agreement dictate the cost of rent. With JGM Properties, if you want to customize the space with new carpet or paint, you may need to make a commitment to stay in the building. Month-to-month terms get you "as is" space only.

If you desire a one or two- year lease, you can expect fresh paint of your choice and a standard selection of new carpet. Going with a three to five year lease will allow you to customize your space. Walls and doors can be moved or added, and custom paint and carpeting are also part of the package.

With a longer-term lease, not only will you receive a lower monthly rate, you can also lock in that rate. Alternatively, short term leases will bring higher rates and the unknown potential rate hike when it comes time to renew or extend your lease.

As you see your business mature, plan on going to a longer-term lease as soon as you can.

Hidden Home Costs

Obviously, home offices are easy to begin with. It is the low cost alternative, but it's certainly not free. There are hidden costs that startup businesses often don't consider, such as adding a phone line or upgrading Internet access.

There are also the less obvious costs, such as the time and energy spent having meetings away from home. If you're like most startups, you just meet at a coffee shop nearby, but you need to factor in everything (mileage, coffee for one or more, round-trip travel time, etc.) associated with the 10 to 15 trips you might make each month. You could easily spend $100 a month on meetings that could be held at your office – if you had one.

Next, factor in the possibility of sending the wrong message to a prospective client who calls your business and the phone is answered by a child. What if the dog is barking in the background while you try to work the deal? What is the cost of lost business because a client gets the wrong first impression about your capabilities?

Respect

A startup business should be treated no differently than a larger or long-term tenant. Whomever you choose when it's time to get new office space, you should be treated with respect.

Some people I talk to cannot get landlords or agents to return their calls if they are a relatively small business. The majority of brokers focus only on the big deals that will quickly fill the void in a building and their wallets. I would advise you to avoid those who seem to be avoiding you; there doesn't seem to be room for respect or a relationship to grow in such a situation.

As a perk for JGM Properties' tenants, we always have a number of tickets for the Twins, Vikings, Wild and Timberwolves. The tickets are available throughout the year, not just when a lease is up for renewal or if the tenant is new.

If a leasing agent is slow to call you back, or you think you are getting the run around, move on. In today's office market, no one should be treating you that way.

As a startup, you should make yourself aware of some of the creative office space options such as the ones I outlined above. Be flexible, find a place where you can grow and work with a landlord that appreciates your potential.

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