6 Questions Every FM Should Ask a Real Estate Agent When Looking For a New Office
Finding a commercial real estate agent is a great start when you begin searching for a new office space. Not only do they have access to exclusive listings, but they can be an invaluable resource for facility managers who want to learn more about the ins and outs of a potential new headquarters.
To ensure that your new space is the perfect fit for your company, it’s important to first consider why your company needs a new office and what the non-negotiables are. This will provide you with a clear image of what the company needs to continue growing.
The next step is to consider what else you need from an office in order to succeed. A bigger office may provide you with room to grow, but if you can only secure a one year lease, is it worth the risk of having to pack up and move again in 12 months?
As such, it’s important you get some preliminary questions answered, taking advantage of everything the real estate agent knows about the property before signing on that dotted line.
What kind of commercial lease is being offered?
First things first: you’ll want to find out what kind of commercial lease is being offered, as it will determine the terms and rental rate that you are responsible for. While many leases are easy to understand, others are not, so it’s critical you learn the differences between them. Have your real estate agent explain what is being offered and what kind of services you can expect. Here are a few examples of the kinds of leases you may come across:
- Net Lease: These require the tenants to pay for some or all of the real estate taxes on a property, in addition to a base rent
- Double Net Lease: In addition to the above, these require the tenant to pay for insurance on the space they occupy
- Triple Net Lease: Typically only for industrial properties, these leases require tenants to pay all the costs of operating the building, including repairs and maintenance
- Fully Serviced Lease: The landlord directly pays all or most usual costs
- Gross Lease: Tenants must pay a flat monthly amount, with the landlord responsible for all the building expenses, including taxes, insurance and repairs
- Percentage Lease: These rental agreements apply to retailers, with the tenant paying a fixed rate plus a percentage of gross income
How long will the lease run?
Once you’ve established what kind of commercial lease is available, you need to ask your agent how long it will run for. In most cases, a commercial lease will last you three to ten years, but the term is often negotiable with the landlord. This question is crucial for two reasons, as it will outline when your lease begins and when it will end. This way, companies can forecast when they may need to renew or start looking for your next office.
What is included in the lease?
Depending on your landlord, different services and utilities may or may not be included in your lease. While electricity and heating are often supplied, there could be certain limitations put in place. You should question what kind of access you have to amenities like fiber, or what kind of updates you’ll be able to take advantage or install to stay green. Make sure to speak with your agent about what’s included as well as what must be paid for on top of your rent.
Can we sublet?
In the event you outgrow an office halfway through your lease, it’s important to know whether or not you can sublet to another company. Staying in too small of a space will only stunt your business’ growth.
Confirm with your real estate agent whether or not subletting is possible beforehand, and if the answer is yes, be sure to follow up with questions about who will be responsible for finding a new tenant and who will be responsible for late rent.
Can we renew?
When your lease expires, a landlord has no legal obligation to let you renew at the same rate. Check with your real estate agent about whether or not the lease includes a renewal formula as well as a clause that ensures you’ll get first rights on the space. Otherwise, you may be required to pay the prevailing market rate to stay on.
Does the office comply with ADA?
Before you decide on an office space, make sure to speak with your agent about whether the building is in compliance with the American with Disabilities Act. If not, it may be in your best interest to look elsewhere. These kind of renovations will not only cost a pretty penny, but by not complying, you run the risk of excluding certain employees.
When it comes to commercial real estate, it isn’t uncommon for an FM to feel like a fish out of water. By working with a real estate agent, you provide yourself with a powerful resource, one that will ensure you are equipped with all the information your company needs for a smooth and successful transition.
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