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Commercial Leasing Tips, Strategies, and Cost Savings
Hartman Income REITFebruary 4, 2016
800.880.2212
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What Part of Town Do You Need To Be In?
• Central Business District• Greenway Plaza• Galleria• Energy Corridor• Greenspoint• Westchase
800.880.2212
Items to Consider when Looking at Location
• Employee Commutes• Customer Base• Do you go to them• Do they come to you
800.880.2212
800.880.2212
“In most industries, rent percentages below 10 are
necessary…”Houston Chronicle
http://smallbusiness.chron.com/percentage-rent-should-pay-according-business-gross-income-71111.html
Class “B” Characteristics
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• High-Rise or Low-Rise• Standard Amenities• Value for Companies• Cost 30% Less Than Class “A”
Amenities to Look for
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• Security• Parking • Banking• Gym• Café• Conference area• Fiber optics
Layout Options
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• Open layouts• Private office intensive• Shared office space
How Much Space Do You Need?
•Number of Employees• How much space per employee?• Economy = 100sf• Average = 125sf• Spacious=150sf
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How Much Space Do You Need?• Extra Offices 120sf - 280sf per office• Reception Area 300sf – 500sf • Conference Room200sf – 500sf• Kitchen 150sf – 300sf• Copy Room 160sf• Break Room 300sf• Server Room 300sf
800.880.2212
How Much Space Do You Need?
5 Employees = 625 sf2 Extra Offices = 300 sfSmall Reception = 300 sfConference Room = 300 sfKitchen = 250 sf
1,775 sf800.880.2212
“An urban office building typically has a parking
capability or ratio of 3.0-3.5 per 1,000 square feet of
rentable space.”-
coydavidson.com
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http://www.coydavidson.com/leasing-tips/a-new-occupancy-rate-in-lease-negotiations/
Let’s Talk About LeasesMark Torok
Hartman Corporate Governance and Compliance Counsel
800.880.2212
Factors Affecting Rent
• Base rent• Maintenance costs• Taxes• Insurance
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Factors Affecting Rent cont.
• Utilities• Janitorial• Inflation• Common areas• Your Success
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Lease Types
• Full Service (aka Gross Lease)• Net Leases• Double Net (NN)• Triple Net (NNN)• Percentage Lease
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Type of Lease Rent Basis Often Used In
Full Service (Gross) Landlord pays all costs directly. May be passed to tenant as “Load Factor”
Office, Industrial and Retail Leases
Net Lease Tenant pays rent + some/all taxes, insurance, or maintenance
Any Commercial Lease
Double Net Lease Tenant pays rent + taxes and insurance
Any Commercial Lease
Triple Net Lease Tenant pays rent + taxes, insurance and maintenance
Any Commercial Lease
Percentage Lease Tenant pays rent + percentage of sales
Retail Leases; Malls
Types of Commercial Real Estate Leases
Critical Parts of a Lease
• Description of the space• Term and commencement• Rent• Security deposit• Modifications to the space
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Critical Parts of a Lease cont.
• Limits on uses, completion/exclusivity• ADA compliance• Sublease• Options to renew• Termination and default• Arbitration or court
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