How to find office space?

Perhaps your business is looking to find office space? It may be that you are looking to either

• Expand
• Move – Relocate
• Consolidate
• Sublet to get started

All of the above scenarios come into play when looking to find office property. So let’s review some active steps and point out some pitfalls you will want to avoid.

Finding the right location

The first step in prospecting for a new office is to determine where does your business want to be? Are you looking for downtown Austin locations and if so, are you ready to handle traffic and pay for extra parking costs?  Location has alot to do with budget believe it or not. For example, currently in 2020 Downtown Austin has some of the highest office rates in the market. Each market across America has their own metrics. Not only in the USA, but state wide as well.  Are you a tenant moving into Austin? What type of lease rates are you seeing where you are from?

Mistake #1

Lease rates for offices are not the same market to market , nor are they the same from sub-market to sub-market.

Expenses associated with finding office space

Office properties have expenses- we are not talking about the expenses incurred to move. Expenses for offices come in various types of descriptions, they are as follows:

• NNN
• Full Service
• Gross
• Full Service Gross – synonymous with Full Service

Ideally, we have found over the years, most tenants want to know what their full monthly cost is going to be. Within most multi-tenant buildings the rent that is quoted is full service. Full service is the rent plus the related expenses on the property.  NNN expenses happen typically with smaller office properties. Example: 5 tenants to a building or it is a standalone property. NNN expenses are Taxes, insurance, CAM *(common area maintenance) costs that are added to the base rent.

Mistake #2

Expenses if they are NNN are static. Do not expect your expenses to remain flat year to year if you enter into a NNN lease agreement.

Utilizing a Broker to help you find an office

Some businesses choose to venture out on their own to find an office property. Is that the best way to go? Well, that is up to you. If your business has alot of experience in office leasing and has a team to do the work then perhaps that is the way to go. Most companies do not have a team of commercial real estate experts, and because the market changes they do not really know the current market. For these reasons and more this is is why a commercial real estate broker becomes a valuable asset for your business. Why?

• Brokers in commercial real estate like Shire Commercial do this every day for a living.
• They are familiar with the market and sub-markets
• They have tools that they pay for that provide their Clients with fast results
• Expertise and knowledge so that you can avoid making mistakes that cost you time and money

Every type of transaction is unique with respective tenants. It is all about being efficient and effective so everything is seamless and easy for you and your business. Feel free to search our blog with lots of articles and resources regarding commercial real estate in Austin.  When you are ready, please contact us to see how we can help you find the right office for your needs.

Tenant Improvements

When a tenant negotiates a lease with a commercial real estate broker one of the items that is addressed is alterations or tenant improvements. What is involved within a lease when negotiating or navigating thru a tenant improvement?  Tenant improvements can encompass changes such as paint, carpet, demolition, building new offices, walls, doors etc.. it all depends on what the tenant need to operate their office efficiently and effectively.

Landlord’s interests?

The landlord in this transaction is not interested in allowing tenants to alter their premises extensively or use paint colors that are typically unusual like purple, black. Within the no-go’s for landlords would be the tenant making major alterations to the permanent fixtures within the office space such as restrooms, , electrical wiring or any tenant improvements that could damage or cause issues with other tenants.  Typically in an office environment, a tenant would use the landlord’s contractors to do the job of improvements.

Tenant improvement interests?

As a tenant you want the flexibility to modify the premises and want the modifications to improve the property’s value for you to use. There may be a provision where the tenant has to provide the landlord the premises back to them in it’s original condition when their lease expires and they vacate.  You will have 4 options or a combination of these when embarking on a tenant improvement negotiation within a lease provision. They are as follows:

Option 1:  The tenant shall make no alterations or tenant improvements without the written consent of the landlord, you will find this standard in office leases within the Austin Texas marketplace.  This does include paint or flooring.

Option 2:  The tenant may make minor alterations to the premises such as paint, wallpaper , or lighting fixtures to suit their needs.

Option 3: As the tenant, all alterations made to the premises become the property of the landlord excluding non permanent fixtures such as lighting as they are not permanently attached to the office space.  A tenant can remove personal property which is not a permanent fixture to the office space.

Option 4: The tenant can make tenant improvements to the property with written consent from the landlord, however the work will be done only by the landlord’s contractors or mechanics approved directly from the landlord. All alterations , additions or improvements shall become the property of the Landlord and shall remain and be surrendered with the premises at the termination of the lease.