| As a leasing agent for JGM Properties, most of the | | | | foot x 700 square feet = $11,200 annually. Then |
| startup businesses I encounter are often hesitant to | | | | simply divide that by 12 to get the monthly cost of |
| move into a new office space. People tend to think | | | | $933.00. |
| they are saving a significant amount of money | | | | You should also know the difference between net |
| working from home. They are under the impression | | | | rent and gross rent. Net rent is just the base rent of |
| that office space is too costly for their small | | | | the physical space you will occupy, plus your share of |
| operation and are afraid of making any long-term | | | | the common space, such as hallways, conference |
| commitments. | | | | rooms that all tenants use (net rates are not |
| | | | inclusive). Gross rent is an inclusive price that usually |
| Flexibility Leads to Affordable Office | | | | covers everything except phone and internet service. |
| If You Help the Landlord Help You, Both Can Benefit. | | | | Generally, the average tenant's monthly cost will |
| Many startup businesses begin their journey in the | | | | include the base rent, plus utilities, property taxes and |
| affordable and comfortable confines of home. Before | | | | operating expenses. It is best to ask for the gross |
| they know it, these businesses out grow home base | | | | rent (which is the total cost), so you won't get any |
| and need to replant their operation in a more formal | | | | surprises. Otherwise, an attractive $9 per square foot |
| setting. | | | | rent could quickly grow to $16. It is better to ask up |
| Flexibility Rewarded | | | | front rather than find out after you have driven |
| Flexibility is essential if you want to find great deals | | | | across town to see space you can't afford. |
| that meet your unique startup needs. If you are | | | | Of course the terms of your agreement dictate the |
| considering a move to commercial office space, the | | | | cost of rent. With JGM Properties, if you want to |
| best advice I can give is to be flexible in your needs | | | | customize the space with new carpet or paint, you |
| and look for landlords who are flexible in regards to | | | | may need to make a commitment to stay in the |
| term, price, and overall service. | | | | building. Month-to-month terms get you "as is" space |
| Often an entrepreneur's need for flexible lease terms | | | | only. |
| will dictate their decisions. When I talk with them, | | | | If you desire a one or two- year lease, you can |
| their biggest fears are that of survival and of | | | | expect fresh paint of your choice and a standard |
| managing their growth, which is why they don't want | | | | selection of new carpet. Going with a three to five |
| to get locked into a lease. If your business hits a | | | | year lease will allow you to customize your space. |
| bump in the road and you have to scale back | | | | Walls and doors can be moved or added, and custom |
| expenses quickly, you don't want to be stuck with | | | | paint and carpeting are also part of the package. |
| lease payments for the next three years. | | | | With a longer-term lease, not only will you receive a |
| Conversely, if your business starts to grow faster | | | | lower monthly rate, you can also lock in that rate. |
| than expected, you don't want to be trapped in a | | | | Alternatively, short term leases will bring higher rates |
| space that is too small. For these reasons, | | | | and the unknown potential rate hike when it comes |
| prospective tenants prefer minimum leases of six | | | | time to renew or extend your lease. |
| months to one year – terms which most | | | | As you see your business mature, plan on going to a |
| landlords shy away from. | | | | longer-term lease as soon as you can. |
| Working with startup businesses has taught me the | | | | Hidden Home Costs |
| value of developing ideas that are different and | | | | Obviously, home offices are easy to begin with. It is |
| unusual. I noticed that when I started getting | | | | the low cost alternative, but it's certainly not free. |
| creative, new businesses became interested. Most | | | | There are hidden costs that startup businesses often |
| importantly, I am committed to meeting the needs | | | | don't consider, such as adding a phone line or |
| of every tenant, so in the end we can work | | | | upgrading Internet access. |
| together and come to an agreement. If my tenants | | | | There are also the less obvious costs, such as the |
| need to expand I'm delighted and make every effort | | | | time and energy spent having meetings away from |
| to provide them with new space. On the other hand, | | | | home. If you're like most startups, you just meet at |
| if they need to end a contract or shrink their | | | | a coffee shop nearby, but you need to factor in |
| operation, I assist them in this process as well. In my | | | | everything (mileage, coffee for one or more, |
| line of work, it is crucial to develop longterm mutually | | | | round-trip travel time, etc.) associated with the 10 to |
| beneficial relationships. I would recommend finding a | | | | 15 trips you might make each month. You could easily |
| landlord who will treat you in such a manner. | | | | spend $100 a month on meetings that could be held |
| Watch for Deals | | | | at your office – if you had one. |
| Recently I met a gentleman who needed a flexible | | | | Next, factor in the possibility of sending the wrong |
| deal; I had a 734 foot space sitting empty. | | | | message to a prospective client who calls your |
| Consequently, we agreed that he would pay $375 a | | | | business and the phone is answered by a child. What |
| month, on a month-tomonth basis, while the space | | | | if the dog is barking in the background while you try |
| was still actively marketed. In return if a lease-signing | | | | to work the deal? What is the cost of lost business |
| tenant was found, the gentleman agreed to move to | | | | because a client gets the wrong first impression |
| another office in the building or to one of our nearby | | | | about your capabilities? |
| buildings. He also got the right-of-first-refusal in case | | | | Respect |
| he wanted to stay put. | | | | A startup business should be treated no differently |
| Part of my job is to listen to the needs of new | | | | than a larger or long-term tenant. Whomever you |
| tenants. I heard they had a strong desire for | | | | choose when it's time to get new office space, you |
| low-cost solutions, so I developed a standard | | | | should be treated with respect. |
| package that offers 200 square feet for only $300 a | | | | Some people I talk to cannot get landlords or agents |
| month. The property has a café, free Wi-Fi, | | | | to return their calls if they are a relatively small |
| conference rooms, garage parking and an exercise | | | | business. The majority of brokers focus only on the |
| facility. The price of $300 per month includes | | | | big deals that will quickly fill the void in a building and |
| everything, except for phone service. | | | | their wallets. I would advise you to avoid those who |
| Ask Questions | | | | seem to be avoiding you; there doesn't seem to be |
| Prospective tenants often rely on me, as an agent, | | | | room for respect or a relationship to grow in such a |
| to take the lead, handle most of the process and | | | | situation. |
| answer all of the questions. Sometimes they even | | | | As a perk for JGM Properties' tenants, we always |
| look to me for advice about marketing their business. | | | | have a number of tickets for the Twins, Vikings, Wild |
| Overall, they are looking for a full-service package, | | | | and Timberwolves. The tickets are available |
| not just someone to show them space and get a | | | | throughout the year, not just when a lease is up for |
| signed contract. | | | | renewal or if the tenant is new. |
| Never be shy about asking questions. Landlords who | | | | If a leasing agent is slow to call you back, or you |
| work with new businesses recognize that as a | | | | think you are getting the run around, move on. In |
| general rule, startups need more attention and | | | | today's office market, no one should be treating you |
| support. They should welcome your curiosity and | | | | that way. |
| desire to know how leasing works. | | | | As a startup, you should make yourself aware of |
| For instance, a common question I get is about | | | | some of the creative office space options such as |
| calculating monthly rent. Simply take the cost per | | | | the ones I outlined above. Be flexible, find a place |
| square foot and multiply it by the number of square | | | | where you can grow and work with a landlord that |
| feet, and then divide by 12. Example: $16 per square | | | | appreciates your potential. |