Cost Containment
January 01, 2010
The commercial real estate industry has a language all its own. From absorption to zoning, a typical lease document is filled with terms and conditions that can be challenging and bewildering.
One of the unintended consequences of this complexity can be nasty surprises for lessees who haven’t had the benefit of tenant representation.
In addition to understanding and interpreting all of the arcane language of commercial leases, part of the service that Bayshore Partners offers is helping our clients understand the terms of the lease and how it relates to their unique business operation. In doing so, we are able to make a significant impact on their bottom line.
Costs in a commercial lease need to be uncovered and clearly understood before committing to the space. When comparing spaces that seem to fit your requirements, I’d like to share a few things you should consider.
In addition to the rent for the physical space, most commercial leases contain provisions for allocation of costs related to building operation and maintenance. There are many methods to determine the allocation and allowable costs, and the method used can greatly impact the cost to the tenant.
Another place that hidden costs lurk is in the calculation of usable square footage. The method used for this calculation should be specifically spelled out. If two spaces are compared using the same standard, we often find that spaces that seem to be equal are actually not in terms of usable space.
Most leases will spell out an allowance for tenant improvements. If there are significant architectural changes required, it’s critical to understand what’s being offered in terms of building standard and make sure those items fit the needs of your business.
The best way to avoid a frustrating experience in securing a new space for your business is to undergo a thorough planning process before you start searching for potential locations. It pays to understanding your space needs and how those needs will change in the coming years.
At Bayshore Partners, we work with our clients every step of the way, from planning to moving day. But it doesn’t stop there. We continue to act as advisors to our clients throughout the life their lease.
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