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Date ArticleType
7/30/2019 General
Is Your Office Lease Well Finished?

Is Your Office Lease Well Finished?

You have selected the most optimal office space for your company or professional practice. Now it’s time to think about the details – the finishes.  In some cases, a landlord will provide a turn-key build-out, i.e. where everything a tenant lists will be done and paid for by the landlord.  In other cases, the landlord will limit their work to a specific sum of money, and the tenant will be responsible for any finishes beyond the allotted cap. In still other cases, a tenant will be responsible for all improvements, and the landlord may offset these tenant costs by abating the rent for a period of time.  Improvements are case-specific.  It depends on the landlord’s motivation, the property, and the market.  That said, there should be some contributions from the landlord towards improvement of the premises.  This article will focus on a few specific improvements that tenants sometimes overlook, do not consider, or simply mis-communicate about with the landlord.

The first finish is flooring.  Flooring is often replaced with each new tenancy, but not always.  Over the years, I have seen many different scenarios.  Often in office or industrial facilities, a landlord will underwrite their ‘building-standard’ quality carpeting and base when a tenant signs a minimum of a three-year lease; however, many professionally managed properties seek a 5-10-year term from tenants to replace the flooring.  There are no absolutes when it comes to improvements, but this is typical.  If a company has a massive staff and treads heavy (based on the staff density in the space), the carpeting should be approx. 28 ounces. A landlord many want to cap flooring/base at $18.00 per square yard. This is where it gets tricky. What about removal of the prior flooring/base?  Installation of the new products?  Movement of furniture?  Be sure to specify that heavy grade carpeting and quality base are used to your color/style specifications, installed, and that the prior flooring/base will be removed – and any furniture shall be moved by the vendor prior to installation and then moved back again.  Be as detailed and clear as possible. Some landlords may try to cap their responsibility and pass-through the overage costs to you, the tenant.  If you want upgrades, for example, stylish tile, wood or other material, you may indeed have to pay some of the cost for that – but you should not have to pay for flooring costs with a quality ‘building standard’ in at least a 3-5-year lease term.  Also, if you need VCT in medical exam rooms, kitchens or server rooms, be clear about this as well.  Specify what you need and where you need it, so there are no complications later.

The next finish is window treatments.  Are blinds on the windows?  Exterior and/or interior?  Are new windows being installed that would need blinds as well?  How about hurricane resistant film for older glass and frames?  The time to negotiate these finishes is early in the process.  Oftentimes, landlords have a policy of not paying for window treatments.  They consider it a tenant responsibility.  I disagree and often insist that my clients receive this benefit.  Write it in the scope of work.  Nothing ventured, nothing gained.  They may not pay for top shelf product, but if you ask, or insist, it is likely they will provide a ‘building standard’ product for you if they want your tenancy.  In the case of hurricane film or shutters, this is also a point of negotiation.  An option is for the landlord to pay for it and amortize it above and beyond the rent if the cost is high and it is important to you, the tenant.

The third finish that I want to cover is soundproof walls.  In many cases, the walls of offices and conference rooms only go up to the ceiling grid and not through the plenum to the deck. As such, sound can more easily pass through the top of the walls.  Ask that the walls be built up to the deck.  Also, extra insulation in the walls themselves could help muffle sound.  If windows are between offices, consider double-glass.  There are also wall surfaces available that absorb sound. This material is used in recording studios.  Examples of businesses that may benefit from soundproofing are law firms, medical practices, technology companies, as well as accounting and media firms.

One more thing: If you inherit office space with furniture, ask to own it at the expiration of your tenancy.  Many companies only ask for the exclusive use of it at no cost, but this product could represent thousands of dollars in property that may serve you well in your next facility – plus, the prior tenant or landlord that leaves it for you may not even want to move it later - because of cost, logistics, or other reasons.  Write it in so there is no confusion or misunderstanding.

These are just a few tips that may benefit you – the tip of the iceberg, so to speak.  Every year tenant representatives like me innovate new ways to serve commercial tenant-clients.  The best part about Tenant Representation is that it costs you the tenant nothing, and nothing extra - and you get all the benefits of representation while saving thousands to hundreds of thousands of dollars in extra concessions/occupancy costs. The next time that you have a space requirement, call a Tenant Representative that knows what to ask for and how to get it, and see the difference in your results, specifically your company’s improved bottom-line profits.

Written by Tenant Representative Jason Stagman, CCIM

– Stagman Commercial Real Estate Advisors, ITRA Global

JTS@StagmanCom.com 561-376-5100

www.FindMotivatedLandlords.com