Total Cost of Occupancy

When considering a renewal, relocation, or other facility decision, too many people only look at their real estate costs simply from the perspective of rent per square foot multiplied by square feet leased.  While this provides an accurate picture of your rent payment, it excludes other obligations and doesn’t come close to establishing your total cost of occupancy.

In addition to the base rent, keep in mind that there are utility costs, maintenance expenses, real estate taxes, amortized improvements and a whole host of other charges that the landlord may try to pass along to the tenant. It’s also important to consider the efficiency of the space layout and growth projections for the future. These costs will compound exponentially when you start looking at the total charges across the rented area and over the term of the lease.

On the opposite side of the spectrum, it’s important to consider the up-front costs of each individual option. How much will the physical move cost? What about setting up the phone and data? Will the new space require a large furniture purchase? How will it impact productivity? And what will it mean for business disruption?

Signing a lease without fully comprehending these costs may leave your head spinning from the move and a shock when that first invoice shows up  in your mailbox. It’s important to evaluate each building and consider the rental rates, space efficiency,  and all of the other charges that will be incurred during the evaluation process so you can make the an informed business decision.

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