Southcreek News

3 Kinds of Overland Park Office Space Leases

There are many different types of commercial real estate leases, so it is important to familiarize yourself with each type and what they mean in terms of rental rate before signing an office space lease. These leases can be distinguished by rent calculations and how expenses are factored in. Here is an overview of the three major types of leases and some of their variations, as outlined in the article “Types of Commercial Real Estate Leases”:

#1 Gross Leases

In a gross lease, also called a full service lease, your rent covers all of your expenses. The landlord is responsible for taking care of costs like insurance, taxes, utilities, and maintenance, the costs of which are covered by tenants’ rent.

If you are considering a space that offers a gross lease, you should find out what services are provided and the frequency of those services. While it might sound convenient to have the landlord handle expenses, sometimes things like inefficient energy consumption could end up coming out of your pocket. The upside of a gross lease is that you know exactly what your expenses will be for the month or year, rather than worrying about unexpected maintenance expenses, which ultimately leaves you with more time to focus on your business.

#2 Net Leases

There are a few different types of net leases, but in general net leases involve a lower rental rate for the space with tenants paying additional charges for extra expenses to the landlord such as maintenance, operations, taxes, insurance, or shared services such as trash pick-up, water, sewer, parking lots, landscaping, fire sprinklers, etc. Here are a few common types of net leases:

Single Net Lease – In a single net lease, tenants pay a base rent plus a certain share of the building’s property tax that is proportionally based on how much space the tenant occupies. The landlord is responsible for all other building costs beyond that, except for janitorial services and utilities, which the tenants pays for themselves for their own spaces.
Double Net Lease – In a double net lease, tenants pay for a share of both taxes and property insurance on top of their base rent, and the share is based on how much of the space the tenant occupies. The tenant is also responsible for utilities and janitorial services, but the landlord takes care of other expenses such as repairs and maintenance of common areas.
Triple Net Lease – A triple net lease is the most common type of lease for retailers and freestanding commercial buildings. Also called the NNN lease, in this lease the tenant covers three things besides their base rent: taxes, insurance, and common area maintenance fees. Often utilities for common areas and operating expenses are included as well, such as the cost of a lobby receptionist. However, this is still not quite a full service lease, because tenants still take care of expenses in their own space, such as janitorial services and utilities. Again, the percentage that a tenant pays is based on the amount of space they occupy in the property. These leases tend to favor landlords, so carefully review the fees you might have to pay and try to negotiate for caps. The expenses for these leases can also fluctuate from month to month or year to year, so bear in mind that it might be tricky to predict costs. However, base rent for an NNN lease space might be lower than for a full service lease, because you will have more responsibility in taking care of the building.
Absolute Triple Net Lease – In this lease, which is more rare than triple net leases, a tenant is responsible for expenses in the case of every possible real estate catastrophe, such as rebuilding after a natural disaster or paying rent on a condemned building.

#3 Modified Gross Lease

The modified gross lease is a compromise between the landlord-friendly net lease and the tenant-friendly gross lease. This lease, which is also sometimes called the modified net lease, includes several of the “nets” in the rent—usually insurance, taxes, and CAMs—but leaves the tenants responsible for their own janitorial services and utilities. In this lease the tenant and landlord must negotiate ahead of time what expenses are covered in the rent. Tenants tend to favor this type of lease because they know their rent will still be the same even if insurance, taxes, or CAM costs fluctuate, but at the same time they can control themselves what they spend on things like electricity and janitorial services.

The bottom line when looking at any lease is to keep an eye out for all types of expenses and how exactly you will be responsible for them.

If you are interested in learning more about Kansas City office space for rent, give a commercial real estate broker in Kansas City a call at 913-685-4100!

Factors to Consider When Selecting a Commercial Space for Lease in Overland Park

While budget is and should be a major factor when selecting an office space, there are plenty of other things to consider as well before leasing a space, including the quality of the landlord services and the building’s features. Do not overlook all of these considerations when selecting a space, or it could cost you later in your tenancy. Here are a few factors to consider as you look at spaces, as suggested in the article “How to Pick the Right Office Space”:

#1 Operating Expenses

Remember that you will end up paying more for a space than just rent. Other costs will include energy, maintenance, taxes, and other expenses that the landlord will pass along to you. Make sure you talk to your broker about how a space’s expenses compare to other spaces in an area, particularly similar facilities.

#2 Infrastructure

Make sure that the systems in the building you are looking at fit your business’s operating needs. For instance, if you use a lot of technology and thus need major power and cooling resources, you will want a building that has enough HVAC power for you. Or if your employees need to be in and out of your space throughout the day, you will want to make sure you have enough affordable parking spaces. If your company relies on 24/7 power, you will want to make sure you have access to a backup generator. Consider what you need to operate your business, and make sure that a building you are looking at meets all of those needs.

#3 Space Efficiency

This goes hand-in-hand with operating expenses: make sure that the true bottom line cost of a space is really as good as it sounds. While some spaces might have lower rental rates, you might find that part of the space is not usable for working because it is made up of lobbies, restrooms, elevators, etc. This would mean that you might not be able to fit as many desks into the space as you would a smaller one with a smaller load factor. As you look at spaces, be sure to compare useable square footage and take into account common areas that you cannot use as you please.

#4 Environmental Friendliness of a Building

Not only are many businesses choosing to become more sustainable in general, but often local governments are requiring businesses to meet certain green requirements. Make sure that you work with a broker that understands green requirements and terminology when it comes to buildings, so that he or she can make sure that a space meets your specific requirements. For instance, make sure your broker understands the Leadership in Energy & Environmental Design (LEED) Green Building Rating System—which was created by the U.S. Green Building Council—as well whether or not the properties you are looking at have achieved ratings on this system.

#5 Property Management

You will want to investigate the property management team in a building, since these are the people who will act as a liaison between you and the building owner. Consider talking to current tenants of the building to find out how responsive managers are and to get an idea of the overall quality of things like security, maintenance services, and engineering. Good things to measure would be the property manager’s involvement with the building and the amount of contact they have with tenants. Here are a few common issues tenants have—ask about how often these complaints are raised and how they are addressed:

The promptness and thoroughness of maintenance staff
HVAC systems—specifically the temperature of the building
Parking accessibility
Condition of an elevator

Be sure to get an idea of how each of these potential problems will be handled by a property’s management team.

#6 Tenant Mix

You will want to look at the type of tenants you will be sharing a building with to make sure none will be clashing or competing with your business. On the other hand, a good tenant mix could make a building more attractive if the current tenants create a positive image of the location or help boost your brand. Another good scenario would be if client of your business or a complementary service is located in the same building.

While it would be foolish to discount a financial analysis of two properties, it is still important to research and make note of other factors as well. Sometimes a particularly good benefit could tip the scales towards one property or another if all other factors even out.

If you are interested in learning more about property management, infrastructure, and other features of our commercial space for lease in Kansas City, give a DDI Commercial real estate broker in Kansas City a call at 913-685-4100! We can answer your questions and set you up with a tour of any of our available spaces!

Factors to Consider Before Leasing A Large Office Space in Kansas City

Business of all sizes have to carefully consider the size of a space before moving in, since the growth of your business could be seriously affected by the size of your space. It is important to look at both the pros and cons of leasing a smaller or larger office space. If you are expecting your business to grow in the near future, a larger space might be the best choice because you can simply expand into more of your own office space, rather than restart the exhausting process of finding a new space. Here are some factors to consider if you are looking into a bigger office space for your business, as suggested in the article “How to Think About Your Square Footage Needs”:

Equipment – A larger office space also means adding more equipment without crowding the people in your office. You can also add and adjust other amenities that might not be possible in a smaller space, such as waiting rooms or meeting rooms.
Lease Length – You can also think big by singing a long term lease. The benefit of a longer lease is stability—you know that you will not have to spend time in the near future finding a new space.
Rent – Another benefit of a long term lease is that you might get a better rental rate, since landlords do not want to spend time dealing with frequent tenant turnover.
Pitfalls – The obvious negative side of a larger space is the higher cost for more square footage. You will also sacrifice the flexibility associated with short term leases.

Consider each of these factors if you are thinking about moving your business into a space that leaves room to grow!

If you are interested in office rental space in Kansas City, give Kathy Woodward at DDI Commercial a call at 913-685-4100!

4 Ways to Find the Best Small Office Lease in Kansas City for Your Business

Moving out of the home office into a real rental space can be an exciting sign of growth and success for small businesses. Trends in the commercial real estate market will come and go, but regardless of the market getting a good deal requires being a sharp scout. Check out these tips for seeking out the best possible space for your small business, as suggested in the article “The Do’s and Don’ts of Renting Office Space”:

#1 Consider Your Size

While your time in a cramped home office might have made you dream of large spaces, be prudent when estimating how much space you will actually need. Some experts recommend around 200 SF per employee, but you might be able to manage with less depending on what your budget allows.

There are a few other options besides renting your own space if you have only a few employees. One option is sharing an office suite that already includes furniture and equipment. The fees might be high for a space like this; it typically includes services like internet, phone, copying, and fax, but this might mean that your business can devote its money and energy to other things as you navigate the startup phase. Another option would be to sublet space from another business, which would mean splitting some of the building costs, and you might even be able to use some furniture and other equipment.

#2 Stay Flexible on Lease Length

As a general rule, small businesses should steer clear of long term leases, as they could wreak havoc on your finances if your business does not grow as predicted. Oh the other hand, if your business grows too much, you will be stuck in a cramped space if you committed to a long term lease. A short term lease is most ideal for small businesses, and the best case scenario would be renting with a landlord who can offer properties of different sizes and might even allow your business to move to another floor or nearby space after a few years of growth.

#3 Don’t Ignore the Details

It is important to not only fully read but to fully understand all of your lease terms. You will want to double check to make sure that nothing you are doing is violating those terms, whether it is a window sign, to hours of operation, to equipment usage. It might not be a bad idea to ask an attorney to look over your paperwork, such as the work letter and the lease itself, just to make sure you did not miss anything that will come back to hurt your business.

#4 Consider Clustering

While it might seem counterintuitive at first glance, choosing a location near businesses similar to yours—called clustering—might actually have its advantages. Especially with startup businesses, collaboration can be crucial, and even competition for customers can foster growth for both businesses, such as when gas stations set up on opposite corners. Sometimes research oriented companies decide to work near each other so they can share equipment, discuss best practices, and even collaborate on new ideas. Retail businesses group together so as to be a “one-stop shop” for customers.

The downsides of clustering include the threat of competitors stealing information or employees, so it is important to think about the kind of business you have and how you attract customers and employees before deciding to cluster.

Finding that first office space outside the home can be a make-or-break move for small businesses, so make sure that you research carefully and find out what different options are available to you!

If you would like to learn more about office suites for rent in Kansas City, give Kathy Woodward at DDI Commercial a call at 913-685-4100!

Tips For Understanding Load Factor For an Overland Park Office Space For Rent

In order to understand load factor, it is important to be familiar with terminology such as usable square feet and rentable square feet. Here are a few terms and explanations to help you understand what you are actually paying for your square footage, as outlined in the article “What is the Difference Between Usable vs. Rentable Square Feet?”:

Usable Square Feet

This measurement consists of the space that a tenant will actually occupy when operating their business. Usable square feet could include either a full floor, minus elevator shafts and stairwells, or just a partial floor, depending on what space the tenant leases, but in either case, this measurement also includes things like columns, recessed entries, storage, private bathrooms, kitchenettes, hallways, reception areas, etc. While a lot of these things—such as electrical rooms or janitorial closets—might not be space that can contain a desk or cubicle, it is still all included in the usable square footage measurement.

Rentable Square Feet

Rentable square feet is calculated by adding usable square feet to a pro-rata portion of the common areas in the building. Pro-rata means that this portion is calculated based on what percentage of the building a tenant will occupy. Common areas include meeting spaces, lobbies, stairways, corridors, restrooms—any spaces that are used by all tenants of a building.

Load Factor

Load factor a number used in the calculation that determines the rentable square feet of a particular space. The load factor, also called the common area factor, is based on the percentage of common areas in the building, and can be found by dividing the rentable square feet in the entire building by the usable square feet in the entire building. This number is then multiplied by the usable square feet of a particular space to come up with the rentable square feet for that space. Once you have the rentable square feet of a space, you can multiply it by the rental rate being offered in order to come up with how much rent you will pay monthly or annually.

Understanding these three terms and how they are related can help you make more informed decisions when comparing different offices spaces. Look closely at the amount of space advertised or the rental rate to make sure you know what kind of square footage calculation they are using, what kinds of non-usable areas will be in your space, and what you will be responsible for in terms of common area costs.

If you are interested in offices suites for rent in Overland Park, give a commercial real estate broker in Overland Park a call at 913-685-4100!

5 Commercial Real Estate in Kansas City Leasing Fundamentals

If you are looking to move your business into a new office rental space, check out these fundamental real estate hunting rules to keep in mind when looking at your options, as suggested in the article “How To Lease Commercial Real Estate: Part 1”:

Create Leverage – don’t stop your search until you have found several places that meet your basic requirements. This will provide you with a bit of leverage in negotiations and give you some safety nets if a space falls through.
Use Your Head – do not get emotionally attached to any location until you have logically determined that the lease terms are good for your business.
Know the Expenses – do not sign a lease until you know exactly what expenses you will be responsible for, including maintenance.
Be a Good Reader – request a pro forma copy of a lease from a potential landlord and make sure you read through it very carefully.
Analyze Your Options – make yourself a spreadsheet that includes all of the details of properties you are interested in. Some of the things it should include are unit lease price, square footage, incremental expenses (i.e. maintenance), length of lease term, and any pros and cons.

An organized and thorough search process will only benefit your business in the long run!

If you are interested in commercial space for lease in Kansas City, give one of our commercial real estate brokers in Kansas City a call at 913-685-4100!

Checklist for Leasing Overland Park Office Space

There are a lot of different factors that go into the decision to rent a commercial office space. Here are a few things to check off your list of considerations as you get closer to signing the dotted line on a lease, as suggested in the article “Location and Leasing”:

Consider the possibility of expansion. Will your business grow in the next few years and need more space? Ask if you can put a provision in the lease that allows you to expand into more space if necessary.
Check for local competitors. Technology has made this step easy: just go to Google, enter the what type of business you have, and click the “local” link at the top of the page and put in your type of business to see the location of similar businesses in the area.
Understand your lease and expenses. Know what type of lease you have, such as net or gross, and if you have net, make sure you know what kind of net lease it is and what expenses you will be responsible for related to CAM charges, insurance, taxes, etc.
Keep your options open. Talk to your landlord about having options at the end of your lease term. It is a good idea to aim for a short term lease to give you flexibility in case of growth and to reduce the pressure of a long term rent obligation. However, you will want to try to give yourself the possibility at the end of your lease of either renewing it or moving to a new space based on your needs at that time.
Consider factors besides rent. While you don’t want to pay for a space that is beyond your means, try to factor in other things when judging a space, such as location.
Consult a lawyer. You might want to retain a commercial real estate attorney to help you negotiate your lease. Given what a huge investment renting a space can be, especially for a small business, it might be worth the cost of a lawyer to make sure that you have negotiated the best possible lease.
Take your time. There are plenty of possible options out there, so take your time to do careful research. It is also a good idea to give yourself plenty of time to search and negotiate if you know that you need to move out of a space by a certain date.

Leasing an office space can big a big transition and investment for a business, so make sure you take the time to check each step off your list!

If you are interested in renting office space in Kansas, give a commercial real estate broker in Overland Park a call at 913-685-4100!

5 Tips for Creating a Collaborative Environment in Your Kansas City Office Space

Google, Facebook, Pixar – what do these companies have in common, besides huge success? Collaborative and creative workspaces. With big name companies like these leading the way, many businesses are shifting to office space models that offer a more relaxed environment in which employees are encouraged to use each other as problem solving resources. As suggested in the article, “How to Build a Collaborative Office Space Like Pixar and Google,” there is a strategy to creating this type of environment, and here are some tips for bringing that into your own office:

Space and Bustle – The overarching principle behind creating a collaborative environment is making sure that an office has plenty of space and other design features that encourage employees to bump into one another throughout the day, fostering casual interactions.
Common Areas – the key is to have more than are necessarily needed – workspaces, cafeterias, anything to get people out of cubicles and surrounded by coworkers when doing their jobs.
Food Stops – Google’s rule is that employees should never be more than 150 feet from food – whether it is a cafeteria, a restaurant or a small kitchen in a break room. As employees casually snack throughout the day, they have more opportunity to interact with others.
“Thinking” Spaces – Along with having a lot of common spaces, it is important to have “no-purpose spaces” so people have plenty of options for where to do work outside of their office or cubicle space.
Two or More – These companies also try to emphasize having two or more people in a space when designating office spaces.

The key to collaboration is creating as much space as possible for the kind of casual interactions that can lead to tossing ideas around and problem solving as a team!

If you would like to learn more about office space for rent in Kansas City, give Kathy Woodward at DDI Commercial a call at 913-685-4100!

What is the Benefit of Working With a Commercial Real Estate Broker in Kansas City?

A lot of businesses, especially small start-ups, find themselves faced with the question of whether or not to hire a commercial real estate broker to help them find and lease an office space. Since the commercial leasing process can be long and requires attention to detail, there are a lot of benefits to working with a broker. Here are some questions you might have if you are thinking about hiring a commercial real estate broker, as well as suggestions for how to navigate this process, as outlined in the article “Commercial Real Estate: What You Need to Know Before Leasing”:

Why Should I Work With a Broker?

Commercial real estate is a different animal than residential real estate. It can be a challenge to even just find out what spaces are available. There are also a lot of zoning restrictions to deal with. Commercial real estate brokers can help give you an insider’s view of these nuances, and given that often it is the landlord who pays the broker’s fee, there is really no major reason not to take advantage of this resource.

How Do I Choose a Commercial Real Estate Broker?

The first criteria for choosing a broker is looking for a tenant broker, as tenant brokers specialize in working with potential lessees, versus agents who represent landlords. Tenant brokers typically want you to sign a representation agreement, which makes them the exclusive person who can show you the property. It is not a bad idea to sign this when looking for a small space, as it gives the broker an incentive to find you a great space. However, if you are looking for a larger space where commission is involved for the broker, you might not want to limit your broker options with a representation agreement. If you find yourself in a small town that does not have any commercial real estate brokers, you can still take the reins on your leasing process by going through public tax records to find building owners and contact them directly.

Where Can I Find Commercial Real Estate Brokers?

Once you have decided to work with a broker and you know what you are looking for in a broker, the next step is actually finding one. If you are already working with a commercial real estate attorney on your lease, they should be able to recommend several brokers for you. If you are not working with an attorney, talk to other people you know who have rented commercial property and are pleased with their leases to get a referral. You can also use the internet to find lists of large commercial real estate firms.

What Are the Potential Downsides of Working With a Commercial Real Estate Broker?

There are a few potential pitfalls to keep in mind when deciding to work with a broker:

Brokers do not focus on pointing out terms in your lease that you should negotiate or could be bad for your business.
Commission for brokers is based on the percentage of the lease cost, so brokers will most likely try to push the more expensive spaces.
In general, be aware that the less expensive your lease, the less attention you will probably get from your broker.

With these issues in mind, you might consider working with a real estate attorney as well who can help you with the nitty gritty lease details.

There are a lot of benefits to working with a broker, especially if it is your first time leasing, but be sure how to educate yourself on how to choose the best broker for your business and be aware of a broker’s biases and blind spots!

If you are interested in learning about office rental space in Kansas City, give us a call at 913-685-4100 to hear more about our available affordable office space in Kansas City!

Questions to Ask When Analyzing Your Business’s Overland Park Office Space Needs

Before you make a decision on what kind of office space you want—small or large, short-term or long-term lease—it is important to carefully look at your business and decide what you need in a space. Here are a few questions to consider as you plan for a new office space lease, as suggested in the article “Basic Square Footage Needs”:

What kind of growth do you anticipate for your business in the next year? In the next five years? Having some idea of how much you will grow can help you determine both your space needs and the length of a lease.
How do you typically interact with your clients? Do they usually come to your office space, or do you use technology to get in touch with them? This will determine what you need in terms of waiting rooms or reception areas, versus what kind of technology you need a space to be fitted with.
Will you need an increased number of employees in the next few years? If you know that certain projects or growth will require an increase in your staff, be sure to think about where exactly you will put them.

These kinds of questions can help you determine whether you need to think big vs. small, or short term vs. long term when it comes to your office space lease!

If you are interested in renting office space in Overland Park, KS, give us a call at 913-685-4100 to find out more about our affordable office space in Overland Park!