Thursday, January 17, 2013

Commercial Real Estate Challenges When Comparing Office Options

Offices and office space has always fascinated me. I love bringing people together and customizing a sweet office. Just think about it: what percent of your waking hours do you spend at work? If you?re like me, and it?s a high percentage, you want to have a great space that you genuinely look forward to going to several times a week. Now, the coolest office space in the world won?t make up for a weak corporate culture, but if you have a great corporate culture, an amazing office is just icing on the cake.

Only, commercial real estate makes it mind-numbingly complicated to simply compare the costs of different offices. Here are some of the common items thrown around:

  • A number of months that are ?free rent? or half rent
  • Tenant improvement allowance per foot rented (e.g. the amount of construction costs paid for by the landlord to customize the space)
  • Moving/cabling allowance per foot rented (e.g. money to pay for wiring and moving costs)
  • Percent rent escalation per year and how soon does the escalation start
  • Lease term and how that affects all the allowances above (e.g. a shorter lease results in smaller allowance but more flexibility for startups)

Imagine a spreadsheet with many different variables and that?s what?s needed to compare different office space options. There has to be a better way for startups to rent office space.

What else? What are your thoughts on these challenges when comparing commercial real estate options and what are some additional challenges?

This entry was posted in Entrepreneurship, Operations on by David Cummings.

Source: http://davidcummings.org/2013/01/15/commercial-real-estate-challenges-when-comparing-options/

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