Commercial Leasing · the broker's view
Find Office Space Based on Your Real Occupancy Cost
A tour tells you whether the space looks right. It does not tell you whether the lease will fit your business when operating expenses increase or the build-out runs behind. Compare the full terms of each proposal, in writing, before the address becomes part of your business plan.
Build My Office Space Search Brief
The Short Answer
Office rent is quoted per rentable square foot, and rentable area includes a share of the building's lobbies and corridors. So the first step is to convert each quote into what you will pay each month for the space you can actually use, then add the expenses, the build-out and the increases. A licensed BreakThru Realty commercial agent prepares that comparison. Tyson E. Sam, the broker of record, is accountable for the brokerage's work.
You Tour Usable Space and Pay for Rentable Space
A suite has 4,000 square feet you can put desks in. That is its usable area. The landlord adds a share of the lobby, the corridors and the restrooms, expressed as a load factor. With a 15% load factor the lease is written for 4,600 rentable square feet, and every rate in the proposal is multiplied by that larger figure.
Another building may quote a lower rate with a 20% load factor, and the same 4,000 usable feet become 4,800 rentable. The lower rate can cost more. Until two proposals are converted to a yearly cost for the space you will occupy, they cannot be compared.
Ask each landlord for the usable area, the rentable area and the measurement standard used. An architect can check the usable figure against a test fit of your layout.
Illustrative areas and load factors, not those of any building.
Occupancy Cost on the Rentable Area
Enter the rentable area and the rates from a proposal. It opens on the hypothetical 4,600 rentable square feet above, with a 3% yearly increase on base rent.
| Line | Arithmetic | Amount |
|---|---|---|
| Base rent, year one | 4,600 sq ft × $28 | $128,800 |
| Reimbursable expenses, year one | 4,600 sq ft × $11 | $50,600 |
| Occupancy cost, year one | $128,800 + $50,600 | $179,400 |
| Per month | $179,400 ÷ 12 | $14,950 |
| Per usable square foot | $179,400 ÷ 4,000 sq ft | $44.85 a year, against the $39 quoted |
| Base rent in year five | $128,800 increased by 3% four times | About $144,966 |
Formula. Year-one occupancy cost = rentable square feet × (base rent + reimbursable expenses, each per square foot per year). Monthly cost = that figure ÷ 12. The yearly increase applies to base rent only.
Hypothetical rates. The figures leave out electricity and janitorial service where the lease bills them separately, parking, build-out beyond the allowance and any increase in the expenses themselves. The calculator on this page runs in your browser with the figures you enter and sends nothing anywhere.
Six Terms That Change the Cost After the Rate Is Agreed
| Term | What it decides | What to ask for in writing |
|---|---|---|
| Expense stop or base year | The level of building operating costs the landlord absorbs. You pay your share of anything above it. | The stop amount or the base year, which costs are included, and the building's actual costs for the last two years |
| Improvement allowance | How much the landlord contributes to building out the suite | Which costs qualify, who manages the work, when the money is paid and who pays an overrun |
| Delivery condition | What state the suite is in when it is handed to you | A written description: shell, the existing layout as it stands, or built to an agreed plan |
| Rent commencement | When rent starts relative to when the space is ready | What happens to the start date if the landlord's work or the permits run late |
| Renewal option | Your right to stay after the term | The notice deadline and how the renewal rent is set |
| Expansion right | Your claim on adjoining space if you grow | Whether it is a firm option, a right of first offer or a right of first refusal |
An attorney reviews the lease language for each of these. The table lists what to ask, not what any lease says.
From Headcount to a Signed Lease
- Write the brief. People, private offices, meeting rooms, growth over the term, parking, the date you must be operating and a monthly budget for everything, not only rent.
- Test the fit. Before negotiating, have a layout drawn for the short-listed suites. A suite with the right area and the wrong shape wastes what you pay for.
- Request proposals on one basis. Ask each landlord to state rentable and usable area, base rent, increases, expenses, allowance, free rent and delivery condition, so the answers line up.
- Price the build-out. A contractor's estimate set against the allowance shows the cash you must bring. If you plan to borrow for it, consult a lender.
- Negotiate the letter of intent. The business terms are settled here. They are far harder to change once the lease is drafted.
- Have the lease reviewed. An attorney reads the lease. Check its dates against your move before you sign.
Questions Worth Asking First
- What does office rent per square foot mean?
- It is a yearly rate applied to the rentable area of the suite. A quote of a given number of dollars per square foot means that amount per rentable square foot per year, so multiply by the rentable area for the annual base rent and divide by twelve for the month. Two things have to be added before the figure means much. First, what the rate includes: a full-service rate covers most building costs up to a stated level, while a net rate adds taxes, insurance and maintenance on top. Second, the yearly increase. Confirm both from the written proposal.
- How do tenant improvement allowances work?
- The landlord agrees to pay up to a set amount per square foot toward constructing your suite. In practice the details decide its worth. Some landlords build the space themselves and charge the cost against the allowance. Others reimburse you after the work is done and paid for, which means you fund construction first. Leases differ on whether design fees, permits, cabling or furniture qualify, and on what happens to money you do not use. If the build-out costs more than the allowance, the difference is normally yours. Get a contractor's estimate before you agree the figure.
- What are usable and rentable square feet?
- Usable square feet are the area inside your suite, the space you can furnish and work in. Rentable square feet are the usable area plus your share of the building's common areas, such as lobbies, corridors and shared restrooms. The difference is expressed as a load factor or add-on, and it varies from building to building. Rent and expenses are charged on rentable area. To compare two buildings fairly, divide each proposal's yearly cost by the usable area. Ask which measurement standard the landlord used, and have an architect confirm the usable figure if the lease is a large commitment.
Who Does What
- A licensed BreakThru Realty commercial agent does the day-to-day work and is your main point of contact.
- Tyson is the broker of record: the licensed Florida broker accountable for the brokerage and every agent under it. He reviews the offers, contracts and closing statements that move through the company.
- Which agent works with you, and how the brokerage will represent you, is set out in writing before any work begins.
| Broker of record | Tyson E. Sam, Founder and Broker of Record, BreakThru Realty |
|---|---|
| Florida real estate license | 3565210 |
| Also listed as | Tyson Sam, the spelling in MLS records and on the listing sites they feed |
| Brokerage | BreakThru Realty LLC, a licensed Florida real estate brokerage |
Brokerage compensation is negotiable and is agreed in writing before any work is marketed. No fee or rate on this page is a standard one.
BreakThru Realty is a real estate brokerage. It does not give legal, tax, lending, engineering or appraisal advice: an attorney, a CPA, a lender, an inspector or an appraiser answers those questions, and a broker's opinion of value is not an appraisal.
This Page Explains the Thinking. The Service Page Does the Work.
What the brokerage does for you, step by step, and how to start is on its own page: Tenant representation.
Every figure on this page is an illustration: arithmetic on assumed inputs, shown so the reasoning can be followed. None is market data, a comparable sale, an appraisal, a forecast or the result of a BreakThru Realty transaction.
Build Your Space Search Brief
Describe how the business will use the space, roughly how much it needs and when. A licensed BreakThru Realty commercial agent replies within one business day to turn it into a search brief: the use, the size, the total occupancy cost to plan for and the lease terms worth asking about.
The form asks for: Type of space; What the business does in the space; Preferred city or area; Approximate square feet; Budget or rent structure, if known (optional); Move timing; then your name, an email address or a phone number, and your consent to be contacted about the request. It asks for no documents.
Your request is with BreakThru Realty. A licensed commercial agent replies within one business day to go through the use, the size and the occupancy cost, and what to look at first. You are not committing to a space or to representation.
Prefer to talk? (786) 914-1017 · sales@breakthrurealty.com
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Every Area of Practice
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