Leasing Office Leasing

Answer 1

While almost every industry in the world has been negatively affected by the current economic crisis, one of the hardest hit has been the commercial real estate market. Of the commercial real estate market, the sector that has been struggling the most has been the office segment. Commercial real estate investors in the past had always been able to rely on the fact that there would be strong demand office space in urban areas across the country. When a space became vacant, the investors never had any problems with office space leasing and a new tenant gratefully moved in shortly after.

As many areas of the economy, specifically the financial sector, have worsened, many commercial real estate investors are having extreme problems with leasing their office space. Since 2008, hundreds of financial related firms have either gone out of business or reduced their overhead expenses. This has led to a wide array of layoffs, which drastically reduces the need for office space. Skyscrapers that used to be fully occupied in cities such as Chicago and New York, are now dealing with high vacancy and entire floors of unused space. In fact, the overall vacancy in these markets is at its highest point in decades. This has seriously affected the value of these buildings, and has made office space leasing more of a challenge than ever before.

To encourage office space leasing, many landlords have had to give away a wide variety of concessions that they never had to give away before. For starters, many landlords have to encourage tenants to take space in their building by offering very low rental rate. Landlords also have to allow for short term leases, which allow the tenant to vacate after a short period of time without penalty.

In years past tenants almost always contributed a percentage share to the building’s overall operating costs. This feature of office space leasing has almost been done away with completely, as most tenants now pay nothing more than gross rent. This and the overall rent reductions have had a significant negative impact on the landlord’s bottom line.

Answer 2

When looking for an office lease, it is important to remember that square-footage of the space and it's location should not be the only determining factor in the rental. The usability of the square footage has to come into play, especially if the office rental doesn't include renovations. If the rental includes 1200 square feet, for instance, but 300 of that is only suitable for storage area, the cost of that extra space may not be be a bargain compared to properties with 1000 square feet of fully usable space.

It is also important to consider amenities before signing an office lease. Find out if such items as janitorial service, maintenance and minor renovations will be included before signing paperwork.