Southcreek News

5 Things to Know About Subleasing an Overland Park Office Space

A lot of tenants want the option to sublease their office space if necessary—either for financial reasons, because they want to move to a different space, or because they have more space than they need. It is important to account for this possibility in the first place when negotiating a lease, but it is also important to go back review these terms and understand the process before actually starting to look for a subtenant. Here are a few things to know about subleasing a space, as outlined in the article “So You Say You’re Subleasing”:

#1 Landlord Approval

Most leases that allow a tenant to sublet the space still stipulate that the landlord must give consent regarding the new tenant. An important thing to address in your original lease is the this actual consent procedure. When does the landlord give their consent? How do you as a tenant make a request for consent? Do they have to have reasonable proof for rejecting a potential sublessee? Some leases also allow the landlord to take back the space you might want to sublease, which would excuse you from paying rent for that recaptured space. Make sure that if you are thinking about subleasing, you fully understand your lease’s terms regarding this process.

#2 Rental Rates

Often leases allow the tenant to determine the rental rate for the subtenant, although some leases include a profit sharing clause that allows landlords to keep 50% or more of the profits from the sublease, particularly if the rental rate is higher than the original rate. If there is a profit sharing clause in your lease, make sure that you are careful to discuss how broker fees or the sale of any furniture factors into this division of the profits.

#3 Lease Term

The term of the lease for the sublease tenant cannot be longer than the term for the original tenant. However, extensions to the lease term can be a grey area. Often the original tenant is the only one who can negotiate with the landlord for an extension, not the subtenant.

#4 Prime Lease Rights and Obligations

Generally, unless specified otherwise in the lease, a subtenant inherits all of the rights, benefits, and obligations of the original tenant. This includes things like parking rights, insurance costs, tenant maintenance, etc. This also means that any alterations a subtenant wants to make should be in accord with the requirements in the original lease, including the possibility of removing those alterations at the end of their term. Any exceptions to the original lease should be clearly spelled out in the subtenant’s lease.

#5 Relationship Between Subtenant and Landlord

Typically a subtenant has a non-direct relationship with the landlord, which means that the tenant cannot pursue legal action against a landlord if a landlord fails to meet their expectations in a lease—for example, maintaining the building. For this reason, tenants who sublease typically want it included in their lease that the original tenant has to make a reasonable effort to get the landlord to meet their obligations.

If you’re thinking about subleasing your space, be sure to review your original lease and talk to your landlord so you know what your costs and obligations will be. Be ready for a subtenant to negotiate, and make sure the obligations and rights of both parties are clearly spelled out in a new lease so that the transition is as smooth as possible.

Looking for an office space for lease in Overland Park? Give a commercial real estate broker in Overland Park a call today at 913-685-4100 to learn more about our available spaces and even set up a tour!

6 Questions To Consider Before Leasing Commercial Real Estate In Overland Park

Managing lease negotiations for commercial real estate in Overland Park can be a hassle if you aren’t schooled in the technical language that is used between brokers and property management. To better prepare yourself for this process and make sure you understand what you’re getting yourself into, here are a few questions to consider before signing your lease, as outlined in “10 Things to Consider Before Leasing”:

Is the space in the right area of town? Did you want to be next door to amenities that you need or closer to other like-minded businesses? Particularly if you are a new business, it is also important to consider your image, which your neighborhood can have a big effect on.

How will the parking be handled? Parking is definitely something that can be forgotten about when dealing with larger more important situations during lease negotiations. However, parking isn’t something that should be pushed to the side. Customer, employee and handicapped parking are all different aspects of parking that you should discuss with the landlord.

Do I know who is responsible for what costs? Leasing companies and brokers often use terms that are a bit unfamiliar to a business new to the world of commercial real estate. So when looking at a potential rental space, it is a good idea to go over the various expenses associated with a space and the property to figure out what exactly you are paying when you sign that contract.

Does this space have the amenities I’m looking for? When you are looking for an office rental space, it is a good idea to ask questions about the features and image of the building. Does it have everything you want in your commercial space? For example, are you concerned about an eco-friendly environment or the importance of clients feeling comfortable when they arrive? There are things that you might be interested in knowing about before signing your lease, and can also be confirmed by a thorough tour of the space.

How much space do I need? A good idea for any new business owner is to realize how much space you need right away to run a successful and thriving business. The best way to go about doing this is to stick to your budget and what feels right for your business. Remember to also factor in the potential growth of your business.

Can I improve or build out the space? If a space isn’t exactly what you want it to be yet, that does not mean that it is off the table entirely. Talk to the landlord about whether or not you can build out the space or customize it in other ways. Make sure you clarify who will be responsible for those expenses, what permissions you need, and whether you have to return the space to its original state at the end of your lease.

There are a lot of factors and decisions that go into finding the perfect commercial office space for rent in Overland Park, KS, for your business. Be sure to know what you are looking for and be prepared to negotiate for it!

If you are looking for office spaces for rent in Overland Park, KS, give us a call at 913-685-4100 for more information about our available Kansas office space for rent!

Revisions to Negotiate in Your Small Office Lease in Kansas City

Startups and small businesses negotiating for an office space—maybe for the first time—need to know the places in the lease where they have a little leverage and can negotiate for a better deal. Commercial real estate leases are presented to the tenant in a form that very much favors the landlord, but that doesn’t have to be the final word in negotiations. Small businesses might not have as much leverage as bigger companies, but careful planning and a knowledge of what to push for can lead to successful resolutions. And while research and planning is an important factor, a small business can always benefit from having the assistance of a broker or an attorney in their corner. Here are a few places in a lease where tenants typically find success asking for revisions, as suggested in the article “Small Tenant Lease Negotiating”:

#1 Landlord Consent

Landlord consent may be required of the tenant in two different cases:

Subleasing or Assignment – If a tenant wants to sublease a space or completely assign the lease to a new business, they may be required to get the approval of the landlord for the new tenant. While the tenant might not be able to negotiate for the elimination of this clause, one thing that could help is to require that the landlord must be reasonable in their rejection of a potential new tenant.
Transfers – If a business experiences some sort of change in ownership due to a shift in stock shares or a merger with another company, they may also have to get the consent of the landlord to transfer the rights of the lease to that new party. To have this flexibility, try to negotiate for landlord consent to not be required in the event that the transfer the result of a merger or a business buying the majority of your business’s assets. Often landlords will agree to this as long as the new ownerships has the same financial worth as the original.

#2 Common Area Maintenance Audits

Most standard leases do not contain any mention of an audit if there is a dispute over the common area maintenance rates, but it is common for a tenant to be able to negotiate for this right. Typically this clause stipulates that the two parties will try to resolve the issue within a specified period of time, but if they cannot reach an agreement, a certified third party auditor will be called in to resolve the dispute. It is also possible to specify that the landlord needs to assist with the audit costs in certain cases.

#3 Tenant Alterations

An original lease will often completely prohibit any alterations without the permission of the landlord, but this is typically seen as an extreme restriction—one that would require you to call the landlord every time you hang a picture on the wall. Try to limit this by negotiating for the right to make mall cosmetic changes to the interior of your space, for example painting the walls or changing the carpet. As long as the changes a tenant wants to make are non-structural and not visible from the exterior, most landlords are willing to allow the tenant to make cosmetic changes within a certain budget limit.

#4 Capital Improvements

Some landlords will want to pass the cost of capital improvements—improvements or replacements to the whole building or property—on to the tenant. However, because these alterations will increase the value of the property for the landlord beyond your tenancy, try to negotiate for the landlord to carry the burden of these costs.

The only two exceptions to this rule would be alterations to comply with new laws—but only laws put in place after the you move in, not improvements to correct pre-existing violations—and improvements that will lower the operating expenses of the building. However, you as a tenant should only be responsible for these improvements in proportion to the savings the landlord reasonably believes they will cause.

These are just a few of the possible areas where you might be able to negotiate for some revision in your lease. Be sure to also talk to a broker or an attorney about ways you can negotiate for better occupancy/abandonment requirements, revisions to the mitigating damages clause, and a request to waive punitive damages or claims for profit loss. Commercial leases can be complicated documents, but with the right preparation and support team, even new or small businesses can get a great deal on a perfect space!

Is your business looking for a small office rental space in Kansas City? Give us a call at 913-685-4100 to tell us what you are looking for in a space and find out more about our available affordable office space in Kansas City.

4 Steps for Creating an Option to Expand in Your Office Park in Overland Park, KS

If you are negotiating your lease for commercial property in Overland Park, KS, be sure to consider whether or not you want to negotiate for an expansion clause. An expansion clause gives you the option to expand into more space in your office park in Kansas after a certain point in your lease. If you think your business is going to grow and you are interested in having the option to expand, here are a few steps to take when negotiating your initial lease with a landlord, as suggested in the article “Things to Consider When Negotiating Expansion Rights”:

#1 Identify the Space

The first thing you want to include in your option to expand clause is a clear identification of the space you would want to expand into. Be clear whether it is in the same building or another property that is owned by the same landlord.

#2 Determine the Cost of Expansion

Obviously the ideal situation is to find a space adjacent to yours to identify as your option space to minimize costs, but with any space you choose, it is important to budget for the cost of expansion. Do you need to knock down walls or make any other structural changes? Discuss with the landlord who will shoulder these costs. Often landlords will agree to take on construction costs that will be beneficial to future tenants or raise the value of the space after you leave.

#3 Negotiate the Rental Rate

It is important to talk upfront about what the rent will be in the optioned space. Even if you don’t have a specific number, it is possible to come up with a formula for calculating the new rent. A common agreement is to either apply the current rental rate or a fair market rate based on square footage—whichever amount is lower at the time of your expansion. However, make sure that you also specify how fair market value will be determined, so that this calculation is not left up to the landlord alone. Waiting to monitor the landlord’s decision at the time of the expansion could result in a messy legal process that drags on and ends up costing you more than you planned on spending for an expansion.

$4 Set the Expansion Window

Finally, you will need to negotiate with the landlord to determine when you have the right to exercise the expansion option. Obviously for you as a tenant, the longer the timeframe, the better, but the landlord will most likely want a narrower window to avoid the possibility of space being tied up for too long, so be prepared for some give and take in these discussions.

If you want your business to have the opportunity to grow into more space in your office park in Overland Park, KS, create that option at the beginning of your lease by negotiating for an expansion clause!

Interested in Kansas office space for rent? Give us a call at 913-685-4100 to find out more about our office spaces for rent Overland Park, KS.

5 Things to Take Note of When Touring an Office Park in Kansas

Once you have found a potential office park in Kansas to lease for your business, a crucial first step is touring the space. Make sure you go to the tour with a checklist of things that you want to look at, both in the space and in the whole building, and then take notes on each of those things so you can compare the details of different office rental options later. Here are a few things to look for on your tour, as outlined in the article “Things to Consider When Touring Office Buildings”:

#1 Size and Layout of the Space

The first thing to look at in the actual space is if the size and the layout fit the needs of your business. It might even be worth bringing someone to officially measure the space for you so that you know you are getting the same amount of square footage as advertised in the listing. If you require a specific setup for your office, make sure the space can accommodate that, and ask about options to make some design changes to the space if necessary.

#2 Location and Client Appeal

Determining if a location is right for your business involves assessing many factors: is it convenient for your employees and clients? Does it have curb appeal? What is the surrounding neighborhood like? What other tenants lease here, and are they satisfied with their experience? Be sure to ask all of the specific questions about location beyond whether it’s a good address.

#3 Buildout Possibilities

A space might not be move-in ready exactly according to your specifications, but try to assess if it is almost there, and talk with the landlord early on about what improvements you can make to the space, as well as whether or not the landlord will assist in paying for these improvements.

#4 Parking Capacity and Security

Check to see if there is enough parking both for you and your clients. If you are in the heart of a city, is the parking lot close to the building or a few blocks away? What is the security like in the parking lot or garage, both during the day and after hours?

#5 Lighting Sufficiency

Check to see that there is adequate lighting both in the space and outside of the building if you think employees or clients will be coming and going after dark. Also consider how important it is to your business to have natural lighting, such as windows or skylights, versus standard office lighting.

If you are starting to look at commercial property in Overland Park, KS, make sure that you go into your tours prepared to ask specific questions and record the answers. Having a detailed description of various spaces from your own firsthand observations will make it easier to compare the various office spaces for rent in Overland Park, KS that you are considering.

Looking for Kansas office space for rent? Give us a call at 913-685-4100 to learn more about our office space for rent in Overland Park and even set up a tour!

6 Differences Between a Business Space for Rent in Overland Park and a Retail Space

When thinking about an office space location, it is important to remember that convenience is key to a business selling a service. Which means that if you are a dentist, optometrist, veterinarian, or any another type of professional who wants to set up an office in a retail space, this could help bring in costumers because of the location’s convenience and accessibility. However, when trying to decide if a retail style space is good for you it might be a good idea to keep a few points in mind when making your decision, as outlined in the article “One Lease Does Not Fit All,” which narrows down the important differences between different types of spaces and leases:

Gross Income Reports

Most spaces that have a retail lease may require the tenant to include a report of the amount of sales the tenant is projected to make in a term (monthly, quarterly, or annually). This could potentially be avoided if the tenant makes it so in the lease. It is worth noting that these kinds of reports are not significant for most professional office leases.

Operating Expenses

It is important to understand the differences between the retail space and an office space when looking at what you are actually paying for. Most retail spaces make the tenants pay for everything from maintenance to insurance on top of the base rent. Whereas in an office lease—depending on the type of lease—the tenant has different payments and usually only pays operating expenses on top of the base rent.

Maintenance

As discussed above, the tenant pays for the maintenance in most retail spaces. In a professional office lease the maintenance and repairs are usually controlled and paid for by the landlord, who should make sure that the office space is up to date and standard quality. Tenants should make a point of including this in their lease.

Changing your name

In most cases the landlord in a retail setting must approve a change in the business’s name. This isn’t true for most trade names in office spaces, where the landlord generally considers it irrelevant to the lease.

Redesigning the Interior

Design of the interior space in a retail store is very important to the overall image of the property. Design can affect how many people enter the store, which in turn affects the income of both the store and the general foot traffic and profitability of the whole property. Because of this, interior design might be one of the things that the landlord will want the power to sign off on. This isn’t the case for office space, where the interior space or other alterations might not be significant to sales or the landlord’s bottom line.

Competition Restrictions

In most retail spaces, the landlord will not let you set up your business in a premises where there’s competition near by. Some places might have an exception, but when the landlord sees a potential problem with the gross sales in a certain market, they could refuse you a space. On the other hand, this kind of radius restriction does not happen often in the world of professional office space.

With these points in mind, you can be better equipped to make a decision on whether or not you want to open a space in a retail section or a professional office space. Once you have made your decision, be prepared for differences in leases and landlord relations.

If you are looking for professional office space in Overland Park, KS, give a commercial real estate broker in Kansas City a call at 913-685-4100!

10 Commercial Real Estate in Kansas City Terms You Should Know

10 Commercial Real Estate in Kansas City Terms You Should Know

When you are looking for commercial office space for lease in Kansas City, the best place to start is to familiarize yourself with leasing terminology. Here are a few terms to become acquainted with before going in search of your perfect office space, as outlined in the article “Typical Leasing Terminology”:

Lessee. The individual or business who leases the property, also known as the tenant.
Lessor. The owner of the property, referred to as the landlord.
Rent Rate. The rent rate is listed for a space on a per square foot basis. Be sure to clarify whether the listed rate refers to rentable or usable square footage.
Gross Rental. In a gross rental lease, the tenant’s rental payments cover all services, such as insurance, property taxes, and often some maintenance services. This type of lease is different than a net lease, which charges for each of these expenses separately.
Option to Renew. This is a clause that a tenant can negotiate into the original lease, which allows the tenant to renew the lease before it expires at a pre-determined rental rate. This option is especially useful for tenants who are not sure where they will be in a few years, as it gives them the option to extend their stay or move on if they have outgrown the space.
Rent Free Period. Many landlords offer this as an incentive to tenants, which can go into effect at the beginning of the lease or be spread out through the course of the lease, depending on the negotiated terms.
Date of Possession. This is the date agreed upon in the lease when the tenant officially begins their occupation of the premises. Starting from this date, the tenant assumes liability for anything that might happen in the space.
Property Maintenance. The tenant is typically responsible for maintenance costs both inside their space and in common areas of the building. However, the landlord or property owner generally is responsible for the maintenance of the outside of the building.
Assignment. This clause allows a tenant to pass their lease on to another tenant for the rest of the lease term, usually because the original tenant needs to leave the space due to financial difficulties. The choice of a new tenant is subject to the landlord’s consent. Potential lessee’s should consider trying to negotiate for this clause to be included in their lease to protect themselves in the event of financial difficulties.
Novation. In this situation, an entirely new tenant moves into the premises before the end of the original lease and draws up a new lease directly with the landlord.

Before you start looking for commercial real estate in Kansas City, take the time to familiarize yourself with the vocabulary of the commercial real estate market. This will help make the process of finding a Kansas City office space for rent feel much more in your control.

If you are looking for commercial office space for rent in Overland Park, KS, give one of our commercial real estate agents in Kansas City a call at 913-685-4100 to find out more about our available spaces and commercial property management in Overland Park, KS!

6 Options for Terminating a Small Office Lease in Kansas City

An office space lease can be a big strain on a business during an economic rough patch, and it might be necessary to either terminate a lease or find another way to relinquish a space to save money. Here are a few options for a tenant to consider if a lease becomes too expensive, as outlined in the article “How to Say Goodbye – Exiting Leases”:

Subletting. Rather than simply terminating a lease, a tenant might consider subletting part or all of an office space to reduce the burden of rent. Before subletting, it is important to clearly understand what the lease says about subletting. Often subletting involves getting the approval of the landlord, but be aware that some strict leases allow landlords to reject a subleasing tenant without having to give any reason for their failure to consent. Some landlords might also include a clause in a lease allowing them to recapture a space if a tenant plans to sublet it, even if you only want to sublet a portion of the space. If you are able to sublet, remember that you will most likely still be considered liable for the space, so be careful who you choose to sublet to.
Assignment. Another similar option to subletting is assigning the lease to another business. This sidesteps the issue of terminating the lease, but it also means handing over the entire space and lease to a new tenant. As with subletting, make sure your lease allows it and know that most likely the landlord will most likely have the right to approve or reject the potential assignee. Sometimes leases prohibit assigning or even subletting a space to other tenants on the property, so be aware of who your options are.
Buy-Out. Another option is to buy-out the remainder of the lease obligations, which would make for a more amicable form of lease termination. This possibility is important to address when crafting a lease. When negotiating, the tenant should try to make sure their only obligation is to deliver the leased space “as is” on move-out day. Also, try to negotiate certain releases, such as a release from guarantees. However, releases can be tricky because this might also affect the return of the security deposit or any reconciliations for CAM payments if the tenant overpaid.
Restructuring. Another option less drastic than a buy-out is to talk to your landlord about the possibility of restructuring the lease, possibly to include a shorter lease term.
Defaulting. On the surface, this is the simplest option for a tenant who can no longer afford the lease, but this route is fraught with costs and liabilities, such as losing the security deposit or having to pay other fees. This also is a bad option if you have a substantial personal guarantee included in your lease, or if you have a lot of time left in your lease term and will be required to continue paying rent for a substantial amount of time.
Constructive Eviction. This route is fairly uncommon, but in some cases it is possible to claim constructive eviction to be able to leave the space. In order to invoke this right, a tenant must prove that the landlord somehow interfered with the promised use of the property, depriving the tenant of the enjoyment or beneficial usage of the space. Some examples of actions that could lead to this possibility include a landlord failing to heat a space, provide electricity, or maintain certain things such as elevator functionality or sanitary conditions. In some cases, a tenant might be able to cite the actions of another tenant on the property if they were directly caused or sanctioned by the landlord. In the event that a tenant gets a constructive eviction, they are no longer able to use the premises at all and typically must leave pretty soon after the eviction is granted.

These options are important to be aware of not only if you need to terminate a lease, but also if you are beginning negotiations for a new lease and want to outline your options for exiting.

If you would like some information about office lease rates in Kansas City, give Kathy Woodward a DDI Commercial a call at 913-685-4100.

3 Ways To Save Time And Money When Negotiating Your Overland Park Office Space Lease

A big difference between the world of commercial real estate and residential real estate is the negotiations you can use for incentives and price allowances in commercial leases. Here are a few ways to save time and money through negotiation, as outlined in “Tenant Leases: Save Time & Money In The Leasing Process”:

#1 Have the perfect team.

It is important when negotiating for a lease to understand the space you are looking at. This could mean opening your doors to new people and consultants, like engineers, lawyers, and contractors, to help you with the process. Having these third party professionals on your side will make a huge difference when striking a deal with the landlord.

#2 Be engaged in the process.

As much as a team will help in the process of making sure you are getting just what you want, you can’t leave it up to them to make the final decisions. Be engaged in the negotiation process, make sure your voice is heard, and don’t settle until what you want is achievable. After all, this is your business and you want to be comfortable in the space you are renting.

#3 Understand the issues.

A division of labor will help you make the transaction for your business smooth and easy. Keep an eye on everything that is happening in the lease agreement and take notes on anything that may cause issues with daily operations.

Understanding the ways of negotiation in real estate can help your business find the best possible deal!

Are you looking for new office space for lease in Overland Park? Give a commercial real estate broker in Kansas City a call at 913-685-4100 to find out about our available spaces!

Office Space Lease in Overland Park from a Landlord’s Perspective

When you as a tenant want to rent a space, it is important to not only know what your own needs and concerns are, but what a landlord’s priorities are going to be. An understanding of what the landlord wants out of a lease can help prepare you for negotiations by figuring out the where you might want to fight for what you want and where it would be best to compromise. Here are a few things landlords want out of a lease, as outlined in the article “Focus on Landlords – Key Landlord Lease Issues”:

Gross-up Clause. Many landlords want to add a gross-up clause to the lease in order to make sure that they can cover operating expenses that might vary from tenant to tenant.
Limited Transfer Rights. You as a tenant might want the possibility of transferring your lease to a third party if necessary, but a landlord might try to retain the right to repossess the space in this situation if they want to.
Access to Premises. The landlord will most likely want to be allowed access to your rented premises in the event that they need access to the property for other tenants’ build-outs—for example to run cables, conduits, or pipes.
Restricted Special Rights. The landlord will try to limit any special privileges, i.e. the right to self-insure, to only the original tenant named in the lease.
Construction Guidelines. The lease might specify that you as a tenant are to carry out any construction on your space in a way that preserves labor harmony.
Right to Withhold Consent. The landlord will most likely try to make sure that your avenues for addressing their failure to give consent on something like subleasing, for example, are limited and do not involve any financial liability for them.
Lease Document Length. A final landlord angle to be aware of is the fact that landlords usually prefer shorter leases in order to be able to sign tenants quickly. They will most likely present a shorter lease with terms that are more favorable for them in the hopes that a tenant will sign without making too many changes.

As you enter negotiations for a space, be aware of what the landlord is looking for so that you can understand your leverage and the priorities of both sides.

If your business is interested in Overland Park office space for rent, give a commercial real estate broker in Overland Park a call at 913-685-4100!