12 Dec As a landlord, how do I calculate the lease rate for my office building?
This is a great question since commercial buildings and their uses vary so widely. There are also a lot of factors to consider when making this determination. The lease rate for an office building is going to largely depend on market conditions. Where are people moving to? What areas of town are the most desirable office submarkets? What’s going on right now at your building? And what are similar buildings in your area charging?
Taking into account the market conditions will allow you to gauge the appropriate lease rate for your building. Up-and-coming and established areas will allow you to ask for a higher lease rate than an area that is dangerous or less desirable. But one of the best ways to calculate the lease rate for your office building is to look at other buildings as comparables.
So, if a building next door is leasing at $21/square foot and it’s generally the same quality as yours, you might look at that building as a great comparable. If the building next door is at $15/square foot, and you’re at $20/square foot, and it’s mostly similar, you’re probably going to have most people look at the $15/square foot rate over your $20/square foot rate. On the same token, if you want more people to look at your building, you can price slightly below comparable buildings. Or you can offer a few added amenities that set your building up as unique and a better choice which may get you a higher rate.
Overall, the best way to calculate the lease rate for your office building is to be aware of the market conditions. Having people on your team that are able to either supply up-to-date information on the market or help you come up with that number based on market conditions is essential to pricing your lease appropriately. Knowing the market conditions and being aware of what is going on around you is incredibly important, and if all else fails, you can ask me, and I’ll guide you through the process!