900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 ·
215.563.0276 ·
Fax: 856.667.3652
The Online Advisor - February 2000
Be a smart business tenant
If you run a company, building rent is probably one of your largest monthly expenses. Keep these points in mind when you negotiate your next lease, and you could boost your net profit.
* Research the market. Is the supply of local business space greater than demand or vice versa? What is the occupancy rate of any building you're considering? With this information, you’ll know how hard you can push to get a good deal - or if you might do better elsewhere.
* Compare apples with apples. If you’re comparing lease terms from different landlords, make sure you’re clear about usable versus rentable space. Usable space is the space you actually occupy. Rentable space also includes your share of common areas, such as lobbies and hallways.
Example: You are quoted a rate of $1.50 per month per usable square foot. If the space you are considering is 1,000 square feet, your rent would be $1,500 per month. Another landlord quotes $1.40 per rentable square foot for the same size space, but you also must pay for 100 square feet of common area (1,100 square feet total). In the second building, your rent would be $40 more per month.
* Who pays? With a gross lease, the landlord pays for taxes, utilities, and insurance. With a net lease, you pay some or all of these. Understand exactly which expenses you’ll pay, and who pays for tenant improvements.
*Avoid surprises. Determine if your rent is scheduled to increase automatically, or if increases are keyed to an index (such as the Consumer Price Index).
* Plan ahead. Does the lease contain an option to renew? Can you make adjustments if your space needs some changes?
For assistance in sorting through your rental options, contact us.