So, your startup is finally picking up, and you feel it's time to rent office space. Before you sign on the dotted line, stop and read this. Commercial leasing is significantly different from residential renting. You need to be clear on what you are signing for if you don't want overhead to eat into your profit margin.
High population areas cost more. Check the type of clientele and employees you are after. If you are not after physical or walk-in clients, you are better off at a cheaper location outside the city. Let a realtor help you get a feel of which commercial area would give you the most bang for your buck.
The class of building you choose affects the leasing cost. Class A buildings are top-notch, typically high-rise buildings with luxurious fittings, such as top class elevators, atriums, and marble floors. If you cater to high-profile clients, this may be for you, but you will pay more.
Class B buildings are downgraded Class A building due to age or degradation. They are about 30% cheaper than Class A's. Class C buildings are functional and cost 50-70% of Class A buildings.
Amount of Usable and Rentable Space:
Rent is chargeable per square foot. If you are leasing 1000 square feet and the cost is $1.5 per square foot, your rent for the usable space will be $1500 per month. But Beware, you will also need to pay for usage of common areas in what is referred to as Common Area Maintenance Fees (CAM). This is meant to cover the cost of maintaining common areas such as public washrooms, the stairwell, parking area etc.
You calculate the CAM using the building load factor. This is the percentage of the common areas in relation the entire building. For example, if the entire building covers 150,000 SF and the common area is 20,000 SF, the load factor will be 13%. If your usable space is 1000 SF, you'll have to pay for 1130 SF or an extra 130 square feet in CAM fees. Your rentable space will, therefore, be 1130 SF as opposed to 1000 SF of usable space.
Commercial leasing is a challenging affair but can be managed if you choose your office space with your needs in mind. Consider the location, the status of the building, the amount of space you require and above all, ask the right questions. In other words, know exactly what you're paying for.