What to Know About Purchasing or Renting Office Space

After more than 18 months of working from home, the Canadian workforce is expected to return to offices across the country in some capacity in the near future. This includes new or growing businesses looking to set down roots in a physical workspace for meetings and day-to-day operations.

While there’s been a lot of uncertainty around making long-term office plans during the pandemic, companies are now starting to make decisions about the type of space they need.

“I think companies are looking at leasing different spaces, but also different uses of the space,” said Clive Levitt, a salesperson and REALTOR® with Slavens & Associates Real Estate Inc. “I think there will be a very large transition away from typical office space, but I don’t think it’s the end of offices in buildings.”

Whether you’re looking to buy or rent a facility for your business, Levitt walks us through some of the basics you should know about office space.

Choose a beneficial location

The importance of “location, location, location” is frequently tossed around in the real estate world, and it still applies to the commercial sector.

Levitt points out choosing the right location is a crucial aspect of buying or leasing office space, especially when you consider ease of access, neighbourhood amenities, and the office image you hope to curate.

An office’s location can influence how workers commute and what nearby beneficial amenities will be available to them. For example, if your company is looking to tap into the family market within the suburbs, Levitt suggests you may want to opt for an office closer to highways and facilities such as daycare centres.

Office life often carries over to outside of the workplace, especially for companies with a strong corporate culture. Because of this, Levitt suggests if your business is social and collaborative, you might want to select a location close to bars, restaurants, and even places for take-out and lunch where employees might eat together.

“I think for some offices, particularly high-tech [offices] and places like law firms, there’s a predominance of social culture and you want to be near the bars and restaurants, because people move from the office into social life,” said Levitt.

How you want to portray your company through images and signage may also have an impact on the type of office space you want and in what location. If your company wants to be anonymous and discrete, a less expensive space on a side street might be a good fit, said Levitt. For companies that want to reap the benefits of pedestrian attention and advertising, a high-traffic location could be more advantageous.

“Do you want to be on a main street where you’ve got some free advertising on your sign? Do you want to present to the community and to the city who you are? I think that [could] affect what you would lease and where you could lease,” said Levitt. “A company that could be more anonymous would go for a less expensive space on a side street.”

Find an accommodating space for your business and employees

There isn’t a one-size-fits-all approach to creating the right office space. However, Levitt explains the type of business you have, and the people who work for it, will impact the office space you need.

“I think the type of business would be a huge influence on what [office] you would choose. One of the things I’m thinking of is do you need quiet space? Are you on the phone a lot? Choose a different space based on that,” he explained

“In an office space where there might be a lot of collaboration and the noise level is higher, you could be on say a busy street or in a less sound-proofed building,” Levitt added.

In recent years, Levitt explains, offices have gravitated towards incorporating more social spaces and opportunities for collaboration. This is reflected in the addition of larger kitchens and places for employees to hang out and mingle.

For businesses who work internationally, Levitt says you’ll want to provide the means for employees to feel comfortable in the office during long or different working hours.

“If they work for, say, a Japanese company, [and] they have to be there at crazy hours in the morning, offices will want a larger kitchen and more places to relax to encourage or to compensate employees for the hours they’re keeping,” said Levitt.

Some office designers may choose to focus heavily on the interior of the space like incorporating natural elements and good lighting, while others pay greater attention to employee-focused features such as ping-pong tables—it generally depends on the type of business in the space. This approach will also apply to how you choose to organize your space, whether you opt for an open concept layout or separate office units.

Get familiar with commercial finances and procedures

Depending on your company’s business goals and growth trajectory, deciding whether to buy or rent an office space can be a crucial decision. With that being said, no matter which route you take, you’ll want to enlist the help of your REALTOR® to get acquainted with commercial real estate terminology and practices.

Levitt explains most companies tend to lease their office space. The price of a commercial lease is broken down into two components—the net rent and the TMI, which stands for taxes, maintenance, and insurance costs. The price of your lease and how long it runs for will vary.

You might have a lease-up period in your contract. This is when the landlord and office tenant agree to an introductory phase where the tenant is entitled to a grace period of free rent while making changes to the space and settling in. The lease-up period could also be negotiated as a combination of free or discounted rent upfront while the landlord works on the office space—there are a number of scenarios that would be worked out, Levitt explains.

In the event you need to break your lease, some commercial contracts will stipulate a penalty or require you to negotiate these terms with the office landlord, Levitt explains.

If you do end up buying office space, it’s not as flexible of an asset compared to a leased facility, but if you’re married to a specific location that’s beneficial for your business, it may be strategic to buy.

Enlist the experience of a commercial broker

Like a REALTOR® in a resale transaction, commercial real estate brokers offer essential services to help you find the office space best suited to your needs.

Levitt explains REALTORS® who are familiar with commercial office space will have the knowledge and experience to inform you of lease-up costs, the local commercial market, as well as negotiate your rent.

“They’ll know what the typical rent should be in that area, the lease term, what the TMI is,” said Levitt. “All of those pieces [are what the] REALTOR® would be familiar with, and they can guide you.”

If you’re looking for an official office for your business or want to make the move to an upgraded workspace, consult the help of a professional commercial REALTOR®. The Canadian Commercial Network (CCN) consists of more than 6,800 commercial specialists across the country that can walk you through the process of buying or leasing the perfect office property for your needs.

Courtesy: realtor.ca

Posted by Teri-Lynn Jones on October 5th, 2021

Real Estate Blog

Choose a beneficial location

Find an accommodating space for your business and employees

Get familiar with commercial finances and procedures

Enlist the experience of a commercial broker

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