With our economy sputtering as the cost of doing business continues to climb, the importance of negotiating an affordable office lease for your business becomes imperitive to maintaining a healthy cash flow. The price of your office space is a primary expenditure for your business, so getting a great deal is important.
I would recommend hiring a commercial broker rather then going about looking for space on your own. The owners of the buildings pay the commission to the brokers, so there is no upfront cost to you. Hiring a commercial leasing broker can save you loads of time and introduce you to special deals in the market. I’d recommend it.
Commercial buildings are rated either, Class A, B or C. The Class A buildings are typically newer with updated systems and amenities. The Class B buildings are older nicely rehabbed properties, usually in prime locations. Lastly, the Class C buildings are older with limited rehab and amenities. All buildings have a market, depending on what kind of business you own, how important having a pristine office image is and, of course, how much money you can afford to put into rent.
Allison Olszta, senior associate for CBRE Landlord Representation team in Chicago, knows the market well. The Chicago team that she is a part of has been responsible for leasing over 11 million square feet of office space and over $2.5 billion in leased value, with 26 buildings and 12,921,330 square feet. She shares with us some data on the Chicago office leasing market.
“The average length of a lease now in Chicago is typically for a tenant lease under 5,000 square feet, 3-5 years and for a larger tenant the term can be anywhere from 7-10 years,” Ms. Olszta says. According to CBRE 3Q11 stats, Class A rents average $38.53 gross, Class B rents are $31.02 gross and Class C is $23.84 gross.
Here are some useful tips from Ms. Olszta for business owners that are looking for office space:
1. Be sure to know what is included or not included in the rent. For example, some River North buildings do not include janitorial services in the rent. This would be an additional monthly cost that one should be aware of for budget reasons.
2. Create your business plans for the length of the lease term. Make sure that you can accommodate growth needs before locking into a long-term deal.
3. Know how your employees get to work. If many employees take the Metra to work, it would save them time if the business was located within walking distance of the station. Time = money.
4. Learn the area and building amenities. Is it important to have a restaurant or coffee shop in the building? Would you use a building conference room? Make sure to have a check-list of items that are important to you in a space and a building.
5. Pay attention to the other tenants in the building. Some tenants prefer not to be in the same building or on the same floor as a competitor of theirs.