I’m looking to rent office space for my half-dozen employees and am completely baffled by the commercial real estate listings. For example, what does “NNN” mean? Some listings refer to “CAM charges” and one even refers to the space as a “white box”. What’s a good rule of thumb for how much space I need per employee too?
I know exactly what you mean because real estate listings are already complicated, but somehow commercial real estate leases are the most puzzling of the bunch. There are a lot of nuances to how leases are crafted, and so the listings are complicated, far more so than when you want to rent a house or apartment.
Let’s start at the beginning. The key question when you lease space is whether it’s “net net” or “triple net” (NN or NNN). The latter is more common and it means that you’re going to be paying for the space along with all property taxes, insurance and maintenance expenses that arise from the use of the property.
This is important because let’s say a storm comes through town and the roof is damaged: if you’re in a triple net lease, you’ll be paying for the roof repair, not the building owner. Similarly, if someone visits your office space, trips and hurts themselves, you’re liable for the insurance and possible payout. A “net net” lease omits the maintenance and is probably a better deal if you can find it.
Now I should also note that each landlord might define these terms slightly differently anyway. As one commercial realtor suggested: “always ask the landlord/Realtor what is included in the NNN’s, as they may vary from place to place. For instance, our company does not include capital improvements (i.e. a roof) in the NNN’s as the owner typically pays for them out of the base rent.”
You also ask about “CAM charges“: CAM refers to common area maintenance and it’s paying for the main lobby and reception area in the building, along with any shared restrooms, a break area, or similar. If the building has a computerized directory or a reception area with a security guard, that’ll be part of your CAM charges too. In some buildings, this can add up!
A “white box” is interesting, because it (or “plain white box” or “vanilla box”) refers to a space where the exterior is complete, the plumbing is done, but the interior is generally unfinished, with walls prepped for paint but not painted and a floor that’s most commonly just a concrete slab. If you want to bring in a decorator and create a beatiful new high-end restaurant, this is a good deal, but if you’re just looking for office space, this is going to be a royal pain.
Finally, know how to calculate square footage too. If you are looking at 1350 square feet, say, and only need office space for seven people, you’ve got a lot more space than you’ll need. Figure each office is 64sf (8×8), add a conference space, reception area, hallways, etc., and a rough estimate of 100sf/person is realistic and suggests that the 1350sf office space is enough for 12-13 people or, if you want to pack ’em in, 15 or more.
Then again, some Web sites suggest that you should plan for 200sf per employee, but that’s because they’re assuming that you need executive offices of 250-400sf, which in my book is excessive and completely unnecessary.
However you calculate the space you need, I suggest that you plan for growth, but don’t saddle your business with an overly expensive lease out of optimism or a desire for lots fo space to spread out.
I hope that’ll help you get started finding some office space. There are some very nice places on the market nowadays so I imagine you won’t have any problem getting just what you need.