Office Space: Make The Tenant Improvement Allowance Work For You

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Many office space leases will be a good fit for companies yet there may be some improvements which have to be done in order to make the premises a perfect fit for the tenant. For this reason, tenant improvement allowances are often included within the commercial office space lease. These allowances come in different forms. Two of the most common forms include a turn-key build-out and a fixed rate allowance.

Difference Between a Turn-Key Build-Out and Fixed Rate Allowance

With a turn-key build-out tenant improvement allowance, the landlord will pay all costs to get your leased premises situated the way that you want them to be. On the other hand, a fixed rate allowance is when the landlord will give you a set amount of funds and anything over that amount will need to be paid by you, out-of-pocket. Both provide tenant improvements for the company owner leasing the space, however, both are quite different in nature.

With the turn-key build-out, you will be ensured that the money is paid for your improvements, however, you may not have the last word regarding what is done, how it is completed and when it is completed by. The landlord will have more control over the work. With the fixed rate allowance, you will have more control over what improvements are made and when but you may find yourself facing some out-of-pocket costs in the end if the project costs more than what was allotted to you under the lease.

How to Benefit from the Tenant Allowance

In order to benefit most from the tenant allowance, consider what improvements you plan on making to the leased premises. If you only plan on completing simple repairs and construction, a turn-key build-out might work fine for you because you won’t need too much control over simple tenant improvements and you will be ensured that the landlord pays for everything which has to be done. If your tenant improvements are more voluminous in nature and you can figure out exactly how much money you need to get the job done and want to ensure that it’s done according to your specifications and schedule, a fixed rate allowance might be best.

Keep in mind that you may always negotiate when it comes to tenant improvement allowances. You can choose a hybrid form of the two options listed above to have the type of tenant improvement allowance which will work in your favor. You may ask the landlord to provide for a turn-key build-out allowance but request that you be able to choose a project manager to oversee the entire project and have this individual report to you. Should you prefer the fixed rate allowance, ask if the landlord would be willing to pay for any extra money needed during the process, which couldn’t be accounted for until the project was underway. Just be sure to have these terms listed in the lease, otherwise, they won’t be valid terms.

Your tenant representative will guide you in the tenant improvement allowance process and go through all of the details with you to ensure that you are making the right choice with regard to this lease term.

Why You Need A Renewal Option

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As a prospective tenant in a commercial office space lease, you not only want to consider your current lease term but the prospect of a future lease term as well. The best time to secure your interest in a future lease term is when you sign your new lease for the current lease term. A renewal option clause in the commercial office space lease will secure your future lease option and provide you with the opportunity to renew your lease term upon its expiration, provided you give the requisite notice. The following will provide some reasons to negotiate a renewal option clause for the lease you are about to sign for your current lease term.

Inclusion of a Renewal Option Clause Secures Your Future Tenancy

Although you may not know whether you’ll want to stay in your current lease location after your initial lease term expires, the time to put the renewal option clause into your lease is prior to signing it. It’s so important to reserve the right to renew your lease when the time comes. This is what will allow you to stay in your current location for another term, should you desire to do so. Your future tenancy is not secure if you don’t have a clause within the current lease to ensure this is so.

The Renewal Clause Is an Option Not a Requirement for the Tenant

Some office space tenants may be hesitant to have a renewal option clause in their lease as they think it requires them to renew the lease upon expiration of the current lease term but this is not the case. The renewal clause provides an option to commercial office space tenants and does not require them to renew the lease in the future. This is an extreme benefit for the commercial tenant, more so than for the landlord because so long as this clause is in the lease, the landlord has no other option but to allow the tenant to renew if they choose to do so. That is, as long as the tenant is paying their rent on time, adhering to other lease terms/requirements, etc. In other words, so long as the tenant is a “good tenant” overall.

Renewal Option Must Be in the Lease to Be Applicable

If you want to reserve the right to renew your lease down the road, the renewal option clause must be in your current lease to positively secure this option. The terms which govern your tenancy are included within the lease. Since the renewal option is a lease term, this also must be in the lease in order to effectively be used in the future. This renewal option should state the terms of the renewal lease and let you know what you are signing up for should you decide to renew your current lease.

It’s vital to have a renewal option within the lease. This lease term will allow you to renew should you choose to do so in the future and will work to benefit you, the tenant, in the long run.chicago office space listings

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Commercial Real Estate in Chicago: Considering a Coffee Shop?

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Are you considering turning your love for coffee into a reality? In today’s world, 63% of young people want to start their own business. So, why not go for it? It is quite the intimidating process; however, it is achievable. Sure, you have to develop a business plan and the delicious coffee you’re going to sell, but do you know what the most important is? The answer: the space. In order to run any successful business, you’re going to need the perfect commercial real estate space to operate. One of the fastest growing industries in Chicago is small coffee cafes. In order to survive in this fast paced industry, there are a number of things that you must look at and consider:

1. Is the space big enough the serve the goal of the business: Can you see your business growing and flourishing in the environment? It is always important to determine if the potential space can contain all of your equipment, products, and projected clientele.
2. Is the space affordable: Are you going to be able to afford the space? Think about whether or not the space will make or break your business. You want to have the perfect balance between spend and return on investment.
3. Is the space owned by someone you can see yourself doing business with: Is the landlord fair and ethical? Always make sure you can have a working professional relationship with the person that owns the potential space.
4. Is the space in a part of the city that will draw in potential customers: Is the space located in a hip or heavily populated area of the city? You always want to make sure you target a good audience of people.
5. Is the space under a fair, negotiable lease: Is the lease something that makes sense to sign? Is it legal and fair? Always pay attention to the detail in the lease.

There are many notions to think about when you’re planning to open your own business, and it is vital to ask all the right questions when considering a space for your business. You may even consider looking for help when you’re searching for commercial real estate. Don’t be afraid to make the process easier.

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Questions to Ask Your Landlord before You Lease a Property

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Moving into any new property—especially an office—is stressful business. A thousand questions might flood your mind, but it is important to keep calm and cool throughout the process of looking for space to utilize for your professional purposes. You want to make sure that you’ve found the perfect place for you. You want to know for a fact that you’re getting the best deal possible. You want to ensure that the landlord is a person that you can actually do business with. These are absolutely normal thoughts and concerns to have; however, right about you’re about to sign that lease you want to be certain that you’re making the best decision for your needs and goals. So, right before you make that final decision make sure to ask the landlord some of the following 10 hard-hitting questions:

1) Is the lease short or long-term?

2) Do you pro-rate rent?

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3) Where and how is rent paid each month?

4) Are there additional fees on top of the rent?

5) Is there property management on site?

6) Are there regular inspections of the property?

7) Are there rules against personalizing your office?

8) If there is a deposit, is it refundable?

9) Is there any maintenance work that I am responsible for?

10) Are there any improvements or construction planned for the building in the near future?

This is one of the most important steps in finding the perfect location for you. If you require additional service in finding office space in the Chicago area, consider contacting a tenant representation service to help you throughout the process.

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The Difference between Renting and Leasing Office Space

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Office Space Chicago

When choosing office space, most business owners think about the location or the interior design. However, one of the most fundamental questions to consider when approaching the decision is whether to rent or lease. While many people think of these two terms interchangeably, they are actually very different arrangements that can have an impact on your business.

A rental agreement is typically a month-to-month contract that is renewed automatically at the end of the month unless the landlord or tenant specifically says otherwise. By contrast, leasing office space is a longer commitment, usually with contracts for six months or a year. Leases are not automatically renewed, but they can be renegotiated or changed to a rental agreement.

A rental agreement provides more flexibility. However, rental agreements are also subject to change. This means that the landlord can raise the rent or change other factors of the agreement at any time. Since a lease is a longer commitment, the terms cannot be changed throughout the duration of the contract, which provides increased stability.

Although the month-to-month contract may appeal to business owners for its flexibility, the unpredictability of these contracts can make it hard to plan ahead. Moreover, if the terms change unexpectedly, the property may become unaffordable or impractical. For this reason, many businesses will benefit from leasing office space for their business goals.