Practice Management > Building Your Business

Office Rental 101: Finding Space as You Grow

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This week was busy and productive. I gained a new client, clarified my financial planning value, and looked for new office space. It seems that I am outgrowing my one room office. Ideally, I’m looking for a three room suite with a kitchenette, private bathroom and a space for a receptionist. I don’t have a receptionist as of yet; I’m just thinking ahead.

I found the price per square foot varies greatly depending on the part of town and age of the building. There is a new construction which will be ready in about two-and-a-half months, in one of the best areas of town, for about $17.29 per square foot. I found another space, which is also very nice, priced at $11.66 per square foot. That’s seems to be the range so far. For those of you who are less familiar with pricing here’s how it works. Take the rent per month and multiply it by 12 to get the total annual rental expense. Then divide this number by the total square feet and that’s your price per square foot. For example, one space I’m looking at is $825 per month plus a common grounds maintenance fee which is $98 per month. So the total rent is $923 a month. Multiply $923 by 12 and you get $11,076 per year. Divide $11,076 by the square footage of 950′ and you get $11.66 per square foot.

When I first looked at it I realized it was a good deal, but I found out the landlord wanted a three-year lease to get that price. I did not want to sign a three-year lease at this stage of my business but I would commit to a one-year term. He said the rent for a one-year lease would be higher so I passed. About a week later, I got a call and was offered the space for the lower price with a one-year lease.

Prices depend on the health of the commercial rental market in your area. Where I practice in Baton Rouge, Louisiana, there are a lot of spaces available. After Hurricane Katrina, you couldn’t find any space as many businesses from New Orleans migrated to Baton Rouge. Rents went up quickly and new offices were built. Now that New Orleans is rebounding, many of these spaces are vacant so it’s a renters market.

I’ll keep you posted.