Assessing the cost for rental of a commercial office space is important, not just for the tenant but for the property owner as well. Owners, or their representatives, must find an appropriate rental rate that balances between getting enough revenue to be profitable versus keeping the rate low enough to be attractive to potential tenants. On the other hand, a tenant must know whether the property has been appropriately priced so that their business does not pay more than what is the going rate for properly in the located area. It then is important to both the owner and the tenant to determine how the rental rates for commercial office leases are established.

There are many variables to consider before the accurate value of a commercial office space can be determined. Following are some of the factors that directly affect the appropriate lease cost of such an office space:

• Available Amenities – The number of amenities that are available to all tenants that lease the commercial property affects its value. The availability of common areas such as parking areas, bathrooms, hallways, elevators and lobbies increases the value of the commercial space as these amenities help improve the working conditions of the renting company. Additionally, the expenses for maintaining these common areas are divided among all tenants and added as part of the monthly rent to arrive at a final cost for that particular lease.

• Building Quality – The quality of the building is another important factor to consider in the cost of the lease. A good first impression has a huge impact on image, so well-constructed and better quality commercial properties can demand a competitive rate in comparison to outdated buildings. Such a value allows tenants to take advantage of the positive image that the building conveys to their clients as well as the safety factor that is commonly associated with such quality.

• Location – The location of a commercial space also has an effect on its value. Those buildings that are situated in a business center have higher rates when compared to those that are in the outskirts of a city simply because they are more accessible by clients and usually impart a higher business potential. The safety factor of the location is also valued and can therefore increase the lease cost.

• Local Appeal – Another factor that has a big effect on commercial property rates is local appeal. For example, a small business office located in New York City is anticipated to be several times higher than a Dallas office space twice its size. One of the factors affecting local rates is demand. Locations that are in high demand with a low available supply of commercial space will obviously have a higher price tag than areas where there is less demand.

• Usable Space– The majority of commercial properties available for lease charge rent based on the total functional area. This useable area of an office is measured in square feet. For example, a property owner provides a quote for a business lease space at $15 per square foot. If the total useable area of the space is 10,000 square feet, then the annual rate for that particular space will be $150,000. So the larger the area, the higher the rental rate will be for that particular property.

• Extra Fees – There are a few extra fees involved in most commercial leases such as building maintenance, operating expense, insurance, and real estate taxes that can increase the cost of the space.

Determining the correct value for a business office lease involves some careful calculations. There are many factors that need to be considered, which is why it is beneficial to a potential tenant to hire a commercial realtor. This person is an expert at appraising commercial property and can provide an accurate appraisal for both property owners and tenants alike. Then a correct cost can be provided to allow for fair lease negotiations and hopefully a favorable outcome for owner and tenant alike!