Southcreek News

Office Space in Kansas City Equipment Leases

Given the current state of our economy, leasing office equipment might be a more sound financial option for businesses than taking out commercial loans. The benefits of leasing depend on the different types of leases. Here is a little bit about the two primary kinds of commercial equipment leases:

Capital Lease – In this type of lease, both the asset and the corresponding debt are recorded on the lessee’s balance sheet. Because of this, the lessee holds all the tax benefits, with deductions for the interest part of the lease payment and depreciation expense. When the lease term ends, the lessee can either get the equipment’s title transferred to them, or have the option to by the equipment for a minimal price (i.e. one dollar).
Operating Lease – In this kind of lease, the lessor keeps the ownership of the equipment or asset. When the term of the lease ends, the lessee can either return the piece of equipment to the lessor, or buy it at a fair market price. The lessor retains tax benefits, including depreciation of the asset and any tax credits, but these benefits may be transferred to the lessee in the form of lower lease payments.

If you decide that leasing office equipment is the best option for your business, look into these different types of leases to decide which one is a better fit!

To learn more about Kansas City office space for lease through Southcreek, give a commercial real estate broker in Kansas City a call at 913-685-4100!

The Pros and Cons to Subleasing Commercial Realty in Kansas City

There are a few different pros and cons to subleasing commercial space for lease in Overland Park:

Pros:

Taking over another company’s space can be a great way to get a short term lease at rent rate that is below the market value. Sometimes you can get a sublease for 10-50% less than the regular lease rate. The shorter your sublease term, the lower the rate.
Sometimes the outgoing tenant might be relocating to a different state or going out of business and might be willing to sell your business their office furniture and equipment at a good price.

Cons:

The downside to signing a shorter sublease is that your company will most likely have to move out at the end of the least term (whether you have outgrown the space or not), or pay the current market price to remain in the space. If the market price jumps up 30% during your year-long sublease, you might wish you had signed a five-year lease.
The subleased space usually comes as is, which means a landlord will not provide tenant improvements like private offices or new carpet. Your business will have to pay for any necessary improvements, which might not be a cost efficient path if you are only planning on staying in the space for a short time.

Consider these different benefits and downsides of renting a subleased space as you search for your best office rental space in Kansas City option.

To learn more about Southcreek’s available spaces, give us a call at 913-685-4100!

Leasing Office Equipment for Your Office Building in Overland Park Part II

Buying office equipment can be a huge expense for a new company. Renting is one other long-term option, but leasing offers several benefits as well. Here are a few of the advantages of choosing to lease your office space equipment:

Leasing can help your business afford more. You might not be able to afford to buy top of the line office equipment for your office space, but you might be able to afford to lease it. Having better furniture and office equipment in your space can boost your employees’ morale and productivity and can create a more professional image for your company.
Leasing could be beneficial for your balance sheet. You might be able to leave some leased assets and related obligations off of your balance sheet. This could potentially improve financial indicators such as your company’s earnings-to-fixed-assets ratio or debt-to-equity ratio. However, remember that accounting rules do require that under certain types of leases you have to report assets leased on your balance sheet.

If you choose to lease rather than purchase equipment, keep your lease short-term—two years is a good length. Negotiating a “modern equipment substitution clause” will let you exchange or update your office equipment so that you can keep up with the changing technology. You will also want to include a cancellation clause that allows you to cancel the lease for a fee, and be sure to note the cost of a cancellation penalty.

Looking for office rental space in Kansas City. Give us a call at 913-685-4100 to find out more about Southcreek’s affordable office space in Kansas City!

Renewal Leases for Executive Office Rental in Overland Park

Renewal clauses are an important part of lease negotiation, but you may not know what exactly these clauses involve or how your landlord might be approaching them. Here is a little information that might help you better understand negotiating renewal clauses for your office space lease in Overland Park:

What your landlord is thinking:
Usually landlords and leasing agents want you to sign a long-term lease—one that extends over several years. This guarantees them a flow of consistant income and means that they do not have to go through the hassle and financial stress of having to re-lease the space every few years.

Renewal clauses:
A long term least might not be the best option for your business if you are growing and do not want to get stuck in a five or 10 year lease. Your best bet might be to consider a short-term lease with option to renew. A renewal clause in a lease gives you the power to decide once your initial lease term expires whether you want to extend the lease or not. For instance, instead of signing a fixed 10-year lease, you could negotiate for a two-year lease with four two-year renewal options.

How to negotiate renewal options:
The ideal renewal situation is negotiating a series of predetermined raises in rent for each new renewal term. If you do not settle on predetermined increases, your landlord could raise your rent in accordance with fair-market rates, which could mean some potentially large and unforeseen rent increases—in particular if your business is renting in an area where commercial office space is in high demand.

Understanding how the length of a lease could affect your business and your landlord’s agenda when dealing with lease lengths can help you be prepared to negotiate the best lease and renewal options for your business!

Want to discuss the lengths of leases for a Southcreek Office Park space? Give a DDI commercial real estate broker in Overland Park a call at 913-685-4100!

Leasing Office Equipment for Your Office Building in Overland Park

If you are trying to figure out how to most efficiently furnish your office space with the equipment your business needs, here is some information about leasing equipment that might be helpful:

Leasing helps your business’s cash flow. The main benefit of leasing is that it frees up cash for your business. Leases for equipment typically do not require down payments, though some might need a refundable security deposit. On the other hand, loans for buying equipment usually need down payments that could be 25% or more.
It is easier to fund leases than purchases. Banks usually will not give capital equipment loans without seeing 2-3 years worth of financial records—something that most new companies do not have. However, leasing companies typically only want to see 6 months – 1 year of credit history in order to approve an office equipment or furniture lease.
Leasing makes it easier to keep up with technology. Leasing is an especially good option if your business needs to stay on top of cutting-edge technology such as the newest communication devices, computers, or other office equipment. Short-term leases are more cost-efficient than purchasing new equipment every few years. Sometimes office equipment leases have annual computer upgrades built into the lease, which saves you from the difficult decision of whether or not you can afford to upgrade.

Check back for more information about how leasing might be a good option for your business!

Are you or any of your peers looking for an office rental space in Overland Park? Give a commercial real estate broker in Overland Park a call at 913-685-4100 to get more information about some of our available spaces!

Creating Competition When Renegotiating a Small Office Lease in Kansas City

Some of the steps to negotiating a lease renewal with a lower rent involve starting negotiations early and doing some research on statistics about the area, but another good renegotiation strategy involves shopping around and creating a little competition for your business.

Before you approach your landlord with a request for proposal, shop around and find a few other available spaces that could be a fit for your company. Send both your current landlord and the other landlords’ requests for proposal.

Take these other requests seriously, even if you would prefer your own space, because they could help you if your negotiations with your current landlord become difficult. Don’t keep your looking around a secret; let all parties know that you are considering all options, which will alert them that they have to compete for your business.

Continue serious negotiations with all of the prospective landlords up until you finalize your new lease. Tell them all that the first one to produce a lease that you like will be the one that gets your business. This move will speed up the whole process.

Even if you truly do want to stay in your current space, seriously looking around at other spaces has no downside. Either you find a better lease for your business or you could potentially spur your current landlord to cut you a better deal.

If you would like to learn more about affordable office space in Overland Park, give a DDI commercial real estate broker in Overland Park a call at 913-685-4100!

Tenant Brokers and Commercial Space for Rent in Overland Park

If you are not sure how to go about finding commercial realty in Overland Park, you might consider working with a tenant broker. Here is some more information about tenant brokers that might help you decide whether you would like to hire one as you look for real estate:

Tenant brokers are people who help prospective tenants find suitable commercial real estate by providing tenants with analyses of the real estate market conditions, letting them know about available spaces, and even negotiating leases with landlords.
Landlords hire brokers called “leasing agents” to help fill their spaces, but remember that they are working for the interests of the landlord, whereas if you hire a tenant broker they are concerned solely with the best interests of your business.
Since a tenant broker’s commission is not directly tied to a specific property, you can usually count on them to give you objective advice.
Working with a broker sends a message to a landlord that you are seriously considering multiple properties. This might make them more competitive and more amenable to negotiating favorable lease terms for you.
When you are looking for a tenant broker, get some referrals from business associates or peers and look into the background of the brokers. Try to find someone who has a good history of helping people find properties, experience negotiating leases, and a solid track record of protecting tenants’ interests.

If you would like to look at some available office spaces in the Overland Park area, give a DDI commercial real estate broker in Overland Park a call at 913-685-4100!

Renegotiating Your Small Office Lease in Kansas City to Lower Rent

If the time to renew your Kansas City office space lease is approaching, you might want to think about some strategies for renegotiation, especially since the current economic climate means that you have a better chance of getting lower rates. Here are a few tips to potentially help you lower your rent as you negotiate a new lease term:

Start Early. Landlords know that they can have the upper hand in a negotiation if they wait until you would not have time to find and move into a new space to talk to you about renewal. With this in mind, you should talk to your landlord well before your lease is due to expire, leaving yourself plenty of time to find a new rental space and move if need be. This sends a message to your landlord that you want a better deal and gives you some leverage.
Do Your Homework. Even if you don’t have a lot of time to do heavy research, just doing a little investigating could save your business money in the long term. You could check out the traffic in your area by asking a local business association for numbers or surveying your neighbors. Find out the details on the vacancy rate in your area. See if the rents in your hare are up or down at the moment. Think about your own sales rates; if they are down and you are honest about this with a landlord, they might be willing to work with you to keep you in the space.

Taking these and other little steps before you begin your lease renewal negotiations could get you a better deal on your rent!

If you would like to learn more about affordable office space in Kansas City, give one of our brokers a call at 913-685-4100!