In a recent New York Times Business blog, titled “Are you paying too much for space”. The editors gave some good advice to answer this question. Read on below to figure out how to answer this question for yourself.
Am I paying too much for office real estate?
- Estimate your budget. What can you afford? It is better to have a smaller office and stay in business, than pay too much and be forced to close your doors.
- Be proactive. Get out in front of your lease so you have to time to create options. Start looking a year ahead if possible.
- How much office space do you need? A common rule of thumb is to expect 125-225 sq ft per person.
- Location Location Location, the old adage rings true no matter what your business. Do you need to be in a high traffic area or is your business better located off the beaten path? Your choice of location might be one of the biggest factor in cost.
- Hire a real estate broker. A good broker knows the local market and material facts about specific buildings: environmental issues, whether the owner is in bankruptcy, how long it’s been vacant. Those facts can be used as leverage.
- Make sure your current landlord knows that you have hired a broker and that you are serious about getting a better deal — even if you have to move.
- No matter how great the deal, moving can be expensive and cost more than you planned, especially if you have to modify the space. Figure out how many years it will take for the deal to pay off.
- Can you sub lease some of your office? Sub leasing can be a viable option to offset costs.
The bullet points above can all be useful in your quest, however in my opinion the most important is the advice to hire a commercial real estate broker. Virtually all commercial brokers charge tenants nothing; they get their commissions from landlords when leases are signed. So what do you have to lose by bringing one onboard?
I know some really good commercial brokers. If you’re renting your space, contact me I would be happy to refer you to them.
photo credit: Old U.S. Post Office and Courthouse Downtown Miami via photopin (license)