5 Hidden Costs When Leasing Office Space
We are serial entrepreneurs. Which means that we’ve started our fair share of companies. Some have been successful. Some haven’t. It’s safe to say we’ve learned a few things along the way.
When we were beginning to roll out our first startup we knew we needed office space, it wasn’t even a question. We started by looking at coworking and executives suites, and neither worked for us. See this video for more on that.
What we didn’t realize (and most people don’t) were all of the expenses that we would incur AFTER the lease is signed.
Be sure to watch out for these five hidden costs when signing your office lease:
1.Tenant Improvement
The real estate definition of Leasehold improvements, also known as tenant improvements (TI), are the customized alterations a building owner makes to rental space as part of a lease agreement, to configure the area for the needs of that particular tenant. So if you need to make ANY changes…it’s on you.
2. Utilities
Leased spaces often include utility costs as part of the agreement, which typically comprises Electricity. Heat (gas) Sewer. Water. Check to see if that is covered in your rent or if it’s extra. Trust us, it adds up.
3. Common Area Maintenance
Sometimes referred to as C.A.M. charges, can consist of anything from mowing the grass, trimming the trees, cleaning to trash takeaway. If you lease a location with multiple tenants (like a business park for example), plan on this charge adding hundreds of dollars per month to your rent.
4. Repairs
Whether it’s heating, air conditioning or your printer, it’s all fun and games until something breaks. Often the contracts are written so that the owner will replace the item if the cost to repair it exceeds a certain percentage. It’s important to be sure clear who is responsible for repairs because when they are needed, they tend to be expensive.
5. Time
As a small business owner, your time is a valuable resource, and you can’t afford to waste it. Most entrepreneurs often don’t have the time or the desire to spend time on their commercial real estate, much less setting up Wi-Fi, finding office furniture and the three to six (yes you read that right) months that it actually takes to get an office to be fully functional. If this sounds like a headache, it might be worth your time to find a fully furnished, month-to-month office in your area. (Ahem, Edison Spaces, ahem.)
