Finding and renting an office space can be overwhelming. For a single practice, it might be your largest expense—for a group practice, your largest fixed cost. Despite this, finding and renting the right office space is important to your business and so you should tackle this job with some inside knowledge. Here are 10 tips assembled from my extensive experience in renting counseling office suites:
1. Don’t rush into it.
Don’t move forward with renting an office space until you’re comfortable. It doesn’t matter if someone tells you that it’s a great deal. It doesn’t matter if “space is scarce” or that you need to “act fast.” Just say, to others (and to yourself) “It might be a great deal, but it’s not a great deal for me if I’m not ready. It’s okay if I miss out on this one.”
2. Bigger isn’t always better.
People focus intensely on price per square foot, but often ignore the size of the space, which effects price even more. I’ve seen 4-office suites that are 800 square feet, and others that are 1500 square feet. If you need 4 offices, the best deal isn’t necessarily the one with the best per square foot price, it might be the suite with the most efficient floorplan. Bonus tip: unless you know for sure that you’re going to do a lot of group therapy, pass on the conference room. Also, pass on the kitchen break room. These spaces cost thousands of dollars a year in rent, and are often underused.
3. Measure the space yourself.
I can’t tell you how many times I’ve been reviewing a floor plan for a 2000 square foot space and asked myself, “Why can’t I fit the usual number of offices in here?” I’ll then do some simple math and realize that the “2000 square foot” space is actually only 1400 square feet! I suspect people sign leases all the time and pay for square footage they’re not actually getting.
4. Negotiate, negotiate, negotiate.
Landlords know that moving is a hassle, an expense, and a risk! Which is why when it’s time to renew, you might find that your previously excellent rental rate is being replaced by a new rate that’s above market value. Ouch! It hurts, but not quite enough for you to move your practice (your landlord’s banking on it). The solution: Negotiate renewal rates before you move in, not at the end of your lease term.
5. Pay less.
I know this sounds like a fake tip. How does one pay less? First, you need to find out what’s important to the landlord. Is it term? Some landlords stress about vacancies and don’t want to worry about finding another renter. They’ll give a great deal if you agree to sign a long-term lease. Is it cash? Some landlords don’t have the money to pay for the buildout; they’ll give a great deal if you’ll pay those up-front expenses (or pay rent in advance). Is it something else? I was negotiating with a landlord and he would not go below $17 per square foot. He’d told me proudly that “everyone in the building pays at least $17,” and he could not go lower. I said, “I understand; $17 it is. But, it’s going to take us a while to get business rolling. Can you begin charging us rent in December (a 3-month delay)?” To that he agreed, which made our effective rate $15.93.
6. Beware of NNN.
NNN stands for “triple net” or “net, net, net” which means that the tenant pays for (1) property taxes, (2) property insurance and (3) common area maintenance (CAM). Combined, these costs are significant! For example, a rental rate is quoted at $15 NNN. Taxes might be $2.50 per foot, insurance $0.35 per foot, and the CAM $1.50 per foot. In this case, your actual rent would be $19.35 per foot. What’s particularly unnerving about NNN is that the expenses increase independently of your rental rate, which has a negotiated escalation.
7. Review common area fees.
Some leases specify that the tenant pays not just for the space he/she uses exclusively, but also for a percentage of common area space like parking, foyers, hallways, and shared bathrooms. In addition, many leases include a “CAM fee.” This isn’t unusual, but should be taken into consideration when you’re pricing one property with CAM fees, to another without. CAM fees can be flat, or variable. When they’re variable, the fees due will change depending on circumstances (for example, if it’s a harsh winter and more money is needed for plowing, and then landscaping the following spring). CAM fees vary considerably, so it’s important to know what your actual costs will be, and what you’re paying for (in some cases fees include the salaries of building admin staff).
8. Work with a realtor.
If the landlord has a Realtor, get a Realtor. It will cost you nothing, and it’s good to have someone on your side. If the landlord doesn’t have a Realtor, getting a Realtor might cost you a couple thousand dollars—either in Realtor fees you’ll pay, or adjusted rents (so the landlord has money to cover the cost of your Realtor).
9. Check HVAC hours.
Some office buildings shut off their heat and air-conditioning systems outside normal business hours. Landlords will say “It’s a big building, it takes a long time to cool down/warm up.” Not true. In my experience, it only takes an hour for temperatures to become very uncomfortable. Make sure there is HVAC available on nights, weekends, and bank holidays.
10. Secure window space.
Having natural night in each therapy office is important, if you want happy team members. Massage therapists don’t seem to mind—they prefer offices without windows. But to counselors (myself included), natural light might as well be oxygen.
Author:
Anthony Centore Ph.D. is Founder and CEO at Thriveworks--a counseling practice, focused on premium client care, with 80+ locations across the USA. He is Private Practice Consultant for the American Counseling Association, columnist for Counseling Today magazine, and Author of How to Thrive in Counseling Private Practice. Anthony is a multistate Licensed Professional Counselor and has been quoted in national media sources including The Boston Globe, Chicago Tribune, and CBS Sunday Morning.