Choosing The Right Space

Topic:
  • Price per square foot
  • Solving extra space dilemma
  • Measuring space
  • Rentable space
  • Cost
    When deciding how much space your business needs, you should consider the space cost, distance from the customer you are trying to target, transportation, and utility availability. Please read over the following to decide what is best for your business.

    Price per Square foot

    On the yearly basis, commercial rents are usually quoted on a square foot basis. It is best to know how the rental rate is quoted and what the corresponding monthly rate is.

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    Solving extra space dilemma

    When looking for a particular square foot, you will most likely not find the exact space (i.e. you ask for 1,200 square feet, but all they had was 1,800 square feet). You must negotiate for a lesser rent per square foot. This way you will occupy more space than you need, but still get the ideal monthly gross rent. Or you can choose to request a portion of the space to be separated.

    However, you can also choose to use what we called "space over time," which mean that you make an arrangement with the landlord to not pay all up front. Well, let's say that you want a 2,000 square feet space, but all they offer was an 2,600 square feet space. What you can do when negotiation the rent per square foot, you should calculate 2,000 square feet the first year. Then the second year, you might pay rent on 2,200 square feet, the third year on 2,400 square feet and so on over the five-year terms.

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    Measuring space

    First, you need to determine what measurement standard the landlord is using to measure the space. Most likely the Building Owners and Manager's Association (BOMA) standard will be used. To purchase a copy of this guide, you should contact your local BOMA offices (located in most major cities).

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    Rentable Space

    What is considered rentable space? Well, in most rental office space there are often columns running through it. The space that is taken up by the columns is what you calle "rentable" or "not usable" (i.e. hallway, washrooms, elevator shafts, public stairs, etc.). Usually these spaces may be as much as 10 percent of the floor dedicated to common area. For instance, if you have 2,000 square feet of rentable area, this space will be "grossed up" by 10 percent and you will pay for 2,200 square feet of space to account for your share of the common areas.

    It is recommended that you should have your broker or landlord, calculate the actual area of any space you consider leasing.

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    Cost

    The following are what you should expect to spend on when leasing a space.
    1. architect fee (construction)
    2. consultant fees
    3. legal fees
    4. moving costs
    5. furniture
    6. signage
    7. building permit and filing fees
    8. electricity fees
    9. telecommunication
    10. heating
    11. ventilation
    12. air conditioning system
    13. flooring and carpeting
    14. insurance
    15. HVAC
    16. painting and wall cover
    17. fire extinguisher
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