Whether the climate for office leasing is oriented toward the landlord or the tenant, the "business protection" aspects of office leasing prevail as a priority. Whether it is the large corporate office of a conglomerate, a regional sales office or a small private company office, there are few other opportunities in a company's life to evaluate itself in such an intimate fashion than when it evaluates the need and use of office space. Economically, the costs associated with office leasing can be staggering.
For example, a firm leasing 10,000 square feet may be dealing with $3,000,000 in rent over ten years, expense increases of $75,000 Construction cost of $300,000, moving costs of $25,000, parking costs of $200,000, design layout and construction drawings of $40,000, just to mention a few.Typically, a firm's office leasing cost now is the second largest administrative cost behind salaries, taxes and benefits. Rental cost alone, however, is only the first consideration in leasing, albeit the largest component.
There are several other categories that carry a great deal of liability to an office user if not reviewed and resolved prior to any lease. Tenants need to spend solid time determining the existing requirements by first taking careful inventory of persons, furniture, offices, and files. Forecasting is needed to highlight any areas that will be expanding or contracting and areas within the company that should or should not be adjacent. Although many buildings may seem friendly enough, each one must be reviewed carefully to determine the compatibility with the tenant's needs and concerns.
It is necessary to prepare a detailed list of the building's assets, liabilities, physical condition, construction, heating and air-conditioning, fire protection, floor plan size, and many other elements for you to compare each detail accurately. Operating expense increases that are billed to the tenant during their lease show up with a big surprise if the cost was forgotten or unbudgeted. Complete details of how the owner intends to operate the building will verify any "hidden" costs down the road.
Remember also that the cash allowance that is made available for constructing or remodeling an office must be determined to be fair, accurate and appropriate to the requirement. Another loss of dollars if not pinned down. It is not at all uncommon for the board of directors of companies to have input on this topic considering its considerable financial impact; as a total cost as well as the contingent liability it represents over many years.
