Commercial real estate can be one of the most expensive aspects of running a business. Companies often need access to more space than they require for day-to-day operations in order to account for expansion. Unusable space within an office is often declared as a loss factor. Loss factors fall under a commercial brokerage and landlord term. Landlords typically refer to commercial space as the rentable square feet as well as the un-usable square feet of a commercial rental space. USF is some of the functional space that’s available to a tenant and this includes the walls and shared sections of an office. Loss factor is the difference between the rentable square feet and the usable square feet.
Loss factor in commercial real estate is something that affects almost every company. Even though the space is not technically usable by a business, the tenants are still charged for these square feet in their lease. The good news is that you can work at reducing your loss factor and reduce the way that you are overpaying for your business square footage as well. Here are some top tips on how you can stop overpaying for your office space by reducing lost square footage!
Do Some Comparison Shopping
If you are worried about some of your commercial office space, you could consider cutting down on buildings that don’t have as much shared space. Shared space can often present in the form of larger lobbies, multiple stairways and bathrooms that are shared by the same company as well as layouts that have higher degrees of shared space between tenants by taking a look at a few different office spaces.
Look at Renewal Early
Renewal early on is a good idea to protect yourself from losses down the road and make sure that there is a better accuracy for recalculating your lease in the future. Even though you are not going to commit to sign up to a new lease immediately, you need to get an idea of what it might cost you for a rent in the coming year. If you’re willing to think a bit proactively you might be able to lock down a renewal option for your lease in the next year that is similar to your original lease. Commercial landlords do have the ability to increase your lease by a legal amount each year. Knowing what to expect can help you to prepare in your business budget.
Coworking is a newer trend for corporate and larger firms, but it is a great idea to save costs. It’s perfect for smaller businesses as coworking allows you to scale your business and office space appropriately, some new start ups fluctuate workers so having access to flexible office spaces is a real boon. Coworking can be useful to larger firms as well! Some companies have resorted to moving some sector or parts of their workforce into flexible office spaces. By separating their workforce like this they can pay for a smaller permanent space for the rest of the office that needs to work there and the teams that can work out of flexible spaces instead. This saves money for the entire firm!
If you are interested in getting a world-class office space for your business, make sure that you are preparing accordingly and working to prevent spaces that you will have to pay for at a loss.
This post was written by Tara Kintz. Tara is a director at Signature Workspace. Signature Workspace, owned and operated by Cantor Fund Management, offers services and amenities such as private offices, flex space, co-working space, virtual offices, meeting/conference rooms, and more. Click here for more information.