You’ve outgrown your home office or you need to use that spare bedroom to give your teen her personal space. You’re ready to take your freelance business up a notch with plans to find your own office space nearby.
Unlike renting an apartment or a townhouse where demand is strong, office rental properties are competitively priced as overbuilding has produced a tenants market. A very good deal awaits you provided that you keep the following office rental tips in mind.
1. Sized right. You’ll pay a per square foot fee for most office locations, but you may find a flat rate for a small office for which demand is particularly low. Know how much room you need and look accordingly. Likely, you’ll find that landlords have a more difficult time filling smaller units, giving you a strong negotiating position when you settle on a place that you like.
2. Understand local conditions. How well do you know your local office rental market? Local as in your city, particularly in the neighborhood that interests you. Offices in high rent districts may have the best discounts, but the cost may be too high for you. Offices located nearer to residential areas may be few in number, but be high in demand. Gauge your local market to understand supply and demand, shopping with your budget in mind.
3. The long and short of it. Freelancers may have difficult imagining where they will be in a few weeks let alone in a few years. Signing a long-term lease can be intimidating especially if your business income fluctuates. If your work is stable, consider signing a multi-year lease to lock in a lower rate. On the other hand, you have much more flexibility to set the terms for a shorter lease especially in markets where the occupancy rate is low. Consider a month-to-month lease, if available.
4. Rent plus incidentals. If you are charged a flat rate for your office space, then you know what your cost will be each month. In some buildings tenants are required to pay other expenses including common area usage of bathrooms, kitchens, the copier room, and parking. You may also be responsible for your own utilities especially gas and electricity. The more prestigious a location, the more likely you’ll be asked to pay incidentals above and beyond your base rent.
5. Your security deposit. Expect to pay a full month’s rent up front plus a security deposit. Unlike an apartment or townhouse rental, the landlord may be looking for a significantly larger deposit than an extra month’s rent. Know that the landlord takes a deposit to cover damage incurred during your tenancy. The deposit also protects the landlord in the event that you default on your lease. So, you may be required to pay a deposit equal to several month’s rent or as much as 10 percent of the lease total, whichever is higher. You should negotiate a lower rate and also know that the landlord is not required to set aside deposit money in a separate bank account to accrue interest. And since deposit terms are negotiable, you may be able to negotiate a letter of credit instead of security deposit, with your bank guaranteeing payment to your landlord.
If renting commercial property is a new experience for you, ask people you know to recommend places for you to consider. These people include other freelancers that have taken office space for themselves and know the ropes. They can give you the low down on a particular rental experience and provide important information about landlord requirements.
Lisa Hendricks is a professional blogger that shares advice on managing rental properties. She writes for LRG Rentals, a rental company providing high quality apartments and townhomes for rent.