|Hints for Lowering Your Office Rent Expenses
Top Ten Strategies for Lowering Rent Expense
1. Don't over estimate your space needs.
Carefully examine how much space you need for your operation. Unless you plan on a rapid expansion, lease exactly the amount you need today.
2. Limit the amount of private offices.
If you are operating on a budget, keep the private offices to a minimum and use work stations. If you require private meeting places, have a couple of small meeting rooms that can be shared and used as needed.
3. Right-size your conference room.
A large impressive conference room that is rarely used is a huge expense. Consider this, a 12 X 24 conference room can cost you almost $7,000 a year if your rent is $20 a square foot (based on 288 Usable Square Feet and 346 Rentable Square Feet). This does not take into account the cost of furniture and special finishes. If you only use your conference room occasionally, look for a building that offers a shared conference room as an amenity and use an empty office as a private meeting room if needed.
4. Only keep current files in your space.
Outsource document and file storage and only keep current files in your space. There are many professional document storage options, don't allow file cabinets holding dead files to expand and eat into your costly office space. If you must keep files close to you, look for a building that provides storage space that is not within your space. Many office buildings contain dry, secure storage areas in lower levels of the building at vastly reduced rental rates.
5. Do you really need a break room?
Your employees need to eat, but do you need to have a large seating area in the space you are paying for? Many office buildings have on-site cafeterias where your employees can sit, relax, grab some lunch or a snack. Substitute the large break room with a small coffee room,
6. Pay attention to the "Loss Factor"
Some buildings are more efficient than others. Look for the buildings with the lowest Loss Factor. Generally speaking the bigger the floor size of a building the less efficient it is for smaller tenants. Know what your "Usable Area" is.
7. Watch out for unanticipated real estate tax increases.
In some markets, real estate taxes are reassessed infrequently. You should know when the last assessment occurred and if a reassessment is planned. If it hasn't occurred in the last 5 years, you may be in for a big surprise if taxes take a big jump up. If you know that a reassessment is planned shortly after you sign a lease, try to have the newly assessed tax rate be your Base Year to insulate you from a big increase in rent.
8. Watch out for heat pump systems.
Heat pumps are individual heating and air-conditioning systems that offer maximum flexibility and control in each office. However, they are generally powered by electric and the utility cost to operate the units are not included in the rent. When comparing office locations, ask about the HVAC and how the cost is calculated. If the cost of operating the climate control is your burden, understand how much it is going to cost to operate.
9. Understand off-hour extra costs
If you need to work extra hours, like an accounting firm at tax time, and need climate control operating on weekends or late nights, you need to understand the cost of this service. (AKA "Overtime HVAC"). Hours of operation in buildings vary widely and the cost to heat or cool a building during off hours can be enormous. You need to understand how the building systems operate (Do you have to heat the whole building to keep your space comfortable?) and what is the hourly cost of operation in the off hours.
10. Watch out for parking charges
Some buildings, particularly those in urban locations have limited parking, but will offer additional spaces for a monthly rate. If you need additional spaces, try to negotiate them into your lease up front. Make sure you understand the charges, how they can increase during your lease term and if you are guaranteed those spaces throughout the entire term of your lease.