Almost all small businesses start out in leased (rented) premises, and most use leased space throughout the life of the business. By leasing rather than buying, you avoid tying up valuable working capital, and it’s easier to move to new quarters if your space needs change.

Ask and answer the following questions:

Exactly why are we moving?
How will this move benefit the company and its future?
What are the drawbacks of moving?
Can we afford to move?
Can we afford not to move?
Is now a good time to move?
How much space do we need?
How much rent can we afford to pay?
How important is location?
When does my new space need to be ready?

In a multi-tenant building, there are often common areas used by all tenants, such as the lobby area, conference rooms, restrooms, or mechanical rooms. Tenants pay rent on all these areas. However instead of charging tenants an extra fee for use of Common Areas, landlords determine each tenant’s pro rata share of the Common Areas, and then add that percentage to the “rentable” square footage.

Operating Expenses are what a tenant pays to cover its pro rata share of Common Area Maintenance (CAM), taxes, and insurance for the building.

Common Area Maintenance (CAM) is an annual charge assessed to tenants in order to maintain the common areas of the property in which all tenants benefit.

“Rentable” square footage is the amount of square footage on which you pay rent. “Usable” square footage is the actual amount of square footage in your suite. Rentable square footage includes a load factor, which is the tenant’s pro rata share of the Common Areas. If 10% of an office building is common area (for example, elevators, hallways, and restrooms), then the rentable square footage includes a 10% load factor. In this example, the “rentable” square footage of 1,650 square feet actually has a “usable” (the actual size) square footage of 1,500 square feet. The extra 150 square feet for which the tenant is paying rent is that tenant’s pro rata share of the common areas.

The most common types of rent for office space are Full Service, Modified Gross, and Triple Net (NNN). Full Service is the most comprehensive rental structure, inclusive of most real estate-related expenses a tenant would normally incur. A Modified Gross rent will usually include a tenant’s pro rata share of operating expenses, but might not include utilities or janitorial services. The least inclusive type of rent is Triple Net (NNN). The type of rent is “net” of the tenant’s pro rata share of taxes, insurance, and common area maintenance (CAM), which means there will always be an additional monthly fee for operating expenses.