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If your looking to lease Austin office space or if your office lease renewal is coming up you may have noticed that office lease rates in Austin have skyrocketed. Austin, Tx is one of the hottest cities in the country. More people want to live here and do business here. And because of that vacancy rates continue to drop and rental rates continue to rise. Because of that many tenants are starting to look at flex space as a lower cost alternative to renting traditional office space. What is Flex Space?Flex space is a type of industrial space that can be used for office or warehouse use. They are typically single story buildings with an entrance and windows on the front and are found in small business parks or semi industrial areas. You see them built out as 100% office or a combination of office upfront and warehouse in the back. How Much Does Flex Space Cost in Austin?When combining ALL expenses flex space will cost about $15 to $20 sf per year depending on the property, location, and terms. Compared to the cheapest office space in Austin which will range from $21 to $25 sf. Unlike most traditional office space, tenants that lease flex space will be responsible for paying their own electric, janitorial (if they want), and hvac maintenance and repairs. You may see flex space base rental rates quoted monthly or yearly. In Austin average base lease rates for flex space range from $13 to $16 sf per year. If quoted monthly that would be $1.08 to $1.33 sf Don’t forget that in addition to the base rate tenants are also responsible for the operating expenses (aka NNN), as well as electric and janitorial (if needed). The NNN’s will cover all of the buildings taxes, insurance, and common area maintenance costs. In Austin, NNN costs will range from $0.25 to $0.35 sf monthly, which is $3.00 to $4.20 sf yearly. To budget for electricity costs I would budget for somewhere between $1.50 to $3.00 sf per year depending on your use and power needs. Benefits of Flex Space Over Traditional Space
Cons of Flex Space
via Tumblr Flex Space – Cheaper Alternative to Leasing Austin Office Space If you are a new business or startup you are probably on a tight budget. You would love to lease that cool creative office space in downtown Austin however with the least expensive rental rates being $45 sf gross up to $65 gross that location is probably not going to work. If you are looking for the cheapest office space in Austin you are more likely to find that in the Northeast and Southeast part of town. Northeast or Southeast Austin may not be a desirable location for your business however at this time it’s really the only areas of town where you will find rental rates ranging from $21 to $25 gross. That includes electric and janitorial. Keep in mind that in most cases the cheapest office space is also going to be older Class C office buildings. These buildings are typically older (10-15 years or more) with few improvements and may not be maintained as well as other classes of buildings. You could also consider renting flex office space which is typically found in semi-industrial areas in NE and SE Austin as well. The inside will still be built out as office however the buildings will be single story tilt wall buildings that look kind of industrial. via Tumblr Where to Find Cheap Office Space in Austin Tx Commercial real estate subleases can be great in that you are typically able to lock in below market rental rates, shorter lease terms, and free furniture, however negotiating commercial real estate subleases can be tricky if you don’t know what you are doing. Negotiating the basic sublease terms is the easy part, but because most commercial sublease contracts are tied to the original master lease between the tenant and landlord it’s important that you and your attorney carefully review that before signing any sublease contract. Below are a few things to consider before signing a commercial sublease contract. (Note: In a sublease transaction the company wanting to sublease the space is the Subtenant, the company that currently leases the space would be the Tenant or Sublandlord, and the building owner is the Landlord) FinancialsJust like a Landlord or Subllandlord would want to review the Subtenants financials to ensure that they can afford to pay the rent, it’s important that the Subtenant review the Sublandlord’s financials. The reason is that in most leases if the Sublandlord defaults because they don’t pay rent then the landlord can lock the doors and ask you to move out. You won’t have any rights to stay. You need to make sure that the Sublandlord is financial sound. There are no guarantees however it will help mitigate your risks. Restoration ClausesNegotiate to avoid having to restore the space to it’s original condition. Many leases or subleases have a restoration clause. Be sure to include in your proposal for the subtenant to not be required to remove any of the original tenant improvements or restore or remove any subsequent alterations or improvements allowed to be made by Subtenant. The same goes for phone and data cabling. In most leases tenants are required to remove the data cabling on or before they move out of the space. Removing cabling can be expensive so Subtenants want to avoid this if at all possible and ensure that they are only “using” the existing cabling and not be responsible for removing after the sublease expires. Landlord Consent & Recognition & Subtenant AttornmentWith any sublease between a Subtenant and Sublandlord the Landlord (aka building owner) has final approval. This is usually stated in the Master Lease, and the terms and conditions of the consent is on a Landlord Consent to Sublease document that is attached to the sublease contract. If you are the Subtenant you want to also negotiate with the Landlord the right to occupy and lease the space in the event the Sublandlord defaults (e.g. does not pay rent, goes bankrupt, etc…). The termination of the lease by Landlord should not terminate the sublease, nor shall the Landlord disturb the Subtenants use and possession of the space. Additionally the Subtenant would have to Attorn to Landlord, which means the Subtenants obligations (e.g. to pay rent) are transferred to the Landlord. If the master lease is terminated for whatever reason the Landlord and Subtenant could create a new lease or continue the sublease. In any case the Subtenant needs to ensure that the the terms of the sublease remain the same. Right to Sub-SubleaseJust because the original lease has a sublease / assignment clause that does not mean the sublease / assignment right conveys to the Subtenant. The Subtenant needs to negotiate the right to sublease themselves in the event they need to dispose of the space. This might not be possible however you need to seek it when possible. The sublease option would have to be approved by both the Sublandlord and Landlord. Make sure to specify the time allowed that all parties have to consent or disapprove. If you let too much time go by you risk killing the deal. Related Images:[See image gallery at www.austintenantadvisors.com]via Tumblr Negotiation Tips When Subleasing Commercial Real Estate When leasing office space in downtown Austin it’s important that you pick a building that has the amenities that will make your employees happy and productive. If they are fitness buffs like me then having a building fitness center complete with showers would be a must have.
via Tumblr Office Buildings With Fitness Center In Downtown Austin If you are leasing office space in downtown Austin and want the convenience of having the parking garage attached to the building you are not alone. Office lease rates are pretty consistent no matter which building you lease in downtown Austin and parking is hard to find, so you might was well make sure the building you are leasing has it’s own parking garage. To make your search easier we have listed the office buildings in downtown Austin that have their own parking garages.
via Tumblr Downtown Austin Office Buildings With Parking Garages |
AuthorI help people and my clients find the right house to call their home. I specialize in home buying and selling, investment properties, luxury homes, and multi-residential properties. https://en.gravatar.com/nicholemhearn ArchivesCategories |