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