Don’t decide on your next Tucson commercial real estate lease on just a few considerations. Answer these questions to make sure you get a good deal.
When tenants look for new office space in Tucson or elsewhere, often they’re impressed by a building’s appearance, location and rent. But many other factors, often hidden at first glance, can turn a good deal into a bad one.
They include, 1] a landlord’s financial situation, 2] the performance of building systems, 3] the likely trend of operating expenses during the next five to 10 years, 4] neighborhood problems.
To protect your company, you need candid, complete answers to six key questions. A tenant representative such as Commercial Real Estate Group of Tucson can assess these issues for you.
How good is the quality of building management?
Determine whether you can count on the landlord to honor the terms of a lease and be a good lease partner. Ask existing tenants:
- Does the landlord respond promptly and deliver fair value?
- Does the landlord seem to see every request as an opportunity for revenue?
- Is the service adequate?
- Does it take many repeated requests to correct a simple problem or achieve agreement on how to proceed with a desired alteration?
What is the financial condition of the building?
- how much debt a building is carrying
- how the operating expenses and management fees at a building compare to similar buildings
- whether critical maintenance has been performed or deferred, which would mean much higher operating expenses in the future.
If a building has serious financial problems, working conditions could be compromised by poor air quality, unacceptable temperature swings and inadequate security.
What is the physical condition of the building?
For example, some floors might have HVAC capacity suitable only for an open floor plan. Virtually any use of closed offices would require supplemental HVAC at your company’s cost.
Here’s another example. Seemingly modern buildings could have elevators with unacceptable wait times. Elevator delays and lapses in elevator service mean tangible dollar losses for tenants when staff wastes time with elevator issues.
Structural integrity is another issue. For years, high winds caused excessive sway on the top floors of a well-known building. Many employees felt the effects of motion sickness and some feared for their safety. Eventually, the landlord provided an adequate engineering solution at substantial expense to existing and incoming tenants.
How do the nature of non-rent charges compare to other buildings?
Many deals appear similar when a lease is signed, but over time total costs tend to vary dramatically.
Determine what your company will likely face in costs other than the lease. These can include
- porter’s wage charges
- operating expenses
- management fees
- real estate taxes
- overtime HVAC charges
- supplemental HVAC charges
- condenser water charges
- tap-in charges
- sub-metered electricity
Are there any hidden drawbacks to a building’s location?
Crucial drawbacks are often overlooked as tenants focus on obvious criteria like proximity to transportation or amenities.
For instance, a client who needs space for employees to work after normal business hours may favor something that looks good in the daytime, but at night has serious security issues.
Expensive heavy security would have been necessary if they were to adequately protect their employees.
How would other tenants in a building affect its desirability?
Here are just two scenarios of why it’s important to know about other tenants.
If you’re moving into a building with one or more tenants that occupy multiple floors, elevator usage and wait times will be very much affected by inter-floor traffic.
The size of other tenants in a building and their possible need for expansion space could affect your own future expansion plans or lease renewal.