Office Space Leasing FAQ's
What Does “Plug and Play” Mean?
A “Plug and Play” space is an office space that includes furniture, wiring and phones. It is very important for you to be clear with the landlord upfront about what items will be included because some landlords may leave chairs or phones out of the lease.
What are the Differences Between Class A, B and C Buildings?
Class A, the best and most expensive type of building, is usually a newer “Glass and Steel” building with large lobbies, on-site security, numerous elevators and high-end details. Class B buildings are similar to class A but may be missing some of the same features, making them one step down from a Class A. Class C buildings have the lowest rents and are much more dated and not as well maintained as a Class A or a Class B building.
What are the Most Common Types of Rent?
The three most common types of rent for office space are Triple Net (NNN), Modified Gross (MG) and Full Service (FS). Triple Net (NNN) is the least inclusive type of rent. With this type of rent, there will always be an additional monthly fee for operating expenses of the building and common areas. Make sure you are aware of these additional fees before you sign anything. Modified Gross rent will most likely include the tenants pro rata percentage of operating expenses, but will not include utility and janitorial costs. Full Service is the most inclusive rent and will include many of the expenses that your company would normally pay. Full Service is offered to smaller tenants in most Class A buildings.
What is a Base Year?
Your operating expenses are determined by the base year. For example, if your company has a Full Service lease for 2007, then your fee for operating expenses is fixed for all of 2007. Most leases though, will charge the tenant for increases in operating expenses over the base year.
Rentable Square Footage vs. Usable Square Footage:
Rentable square footage is the square footage in which you pay rent on. It includes your office square footage as well as the common area square footage. Usable Square footage is the actual square footage within your space and does not include the common areas. The main difference between the two is called the Load Factor which can vary widely and have a significant impact on your total occupancy cost.
What is a Load Factor?
A load factor is the percentage of the building that is Common Areas. Landlords will use this percentage to determine the pro rata share for the common areas for each tenant.
What is a Common Area and Who is Responsible For it?
Common areas are areas in a multi-tenant building that are used by all people. These areas can include such items as the lobby, elevators and restrooms. All of the tenants in the building are responsible for the common areas and pay rent on them although the landlord maintains these areas. The landlord will determine, using the Load Factor, and add that cost onto their respective square footage.
Will my Company be Charged for After Hours Use of Air Conditioning?
Charges can differ depending on the building, but many of the buildings will charge you on an hourly basis. This is common for after hours air conditioning.
What is the Commencement/Termination Date of the Lease?
Make sure you read through your contract thoroughly and are clear on the starting and ending date of your lease. These two dates should be clearly highlighted in the contract.
What Happens if My Company Wants to Stay in Our Office Space After the Lease Expires?
If you know that you will be staying in the same space ahead of time, then make sure to have an agreement with your landlord that states those facts. Without this agreement, the landlord will implement what is knows as a “Holdover Clause” that will detail the scenario if you stay past your termination date. Often times this includes a positive rent.
Can my Company Leave for a New Office Space After We Have Signed the Lease Agreement?
Most likely not. A Lease Agreement is a legally binding contract that requires your company to stay in the space for the agreed amount of time.
