When should I start the process of searching for space?

First, be familiar with your current lease document if you have one, especially the expiration date. You’ll need to start the process at least 9 months and in some situations 12-18 months in advance depending on the specifics of you space requirement. If you have an Option to Extend Clause in your existing Lease, you’ll generally be required to give written notice to exercise the option to the Landlord at least 3 but not more than 6-9 months prior to the expiration date of the lease.

How much office space should I lease?

A good rule of thumb is between 200 -250 square feet per employee. Certain firms i.e. attorneys will require 300+Square feet per employee due to large offices, conference rooms, reception area, file room, kitchen etc. A Tenant Rep Broker will be able to assist you in calculating your particular office space requirement, and more importantly, will help you economize space and save money.

How is a space measured? What’s the difference between “usable vs. rentable” square feet?

The size of commercial lease space can be deceiving and confusing to many Landlords and Tenants. BOMA (Building Owners and Management Association International) sets the standards for building measurements.  http://store.boma.org/

Usable Area – Space physically occupied by people, furniture & equipment.

Rentable Area – Is the Usable Areas plus common areas (hallways, restrooms, lobbies, cafeterias).

Load Factor – Is the Rentable Area divided by Usable Area.  Example: My interior space is 1,200 S.F. (Usable S.F.) My lease quotes the space is 1,550 S.F (Rentable S.F). Consequently the office building has a 29% Load Factor.

What’s the difference in Lease Types?

Triple Net Lease (NNN)- Lease in which the Lessee is responsible for payment of rent prorate share of property taxes, property insurance, Common Area Charges (CAM),  utilities and interior janitorial.

Full Service Gross Lease (FSG)- Lease in which, for specified Rent, the Lessor (Landlord) pays for all Taxes, Insurance, maintenance, utilities (except phone/internet) and generally interior janitorial.

Modified Gross Lease (Mod Gr) – Lessee pays Base Rent, interior utilities and possibly some negotiated CAM charges.

Percentage Leases (%) – Lessee agrees to pay to Lessor a percentage based on a predetermined amount of sales. Generally a retail lease only.

What are CAM Charges?

Building and operating expenses that are paid directly or reimbursed to the Lessor by the Lessee under the terms of the lease, sometimes referred to a “pass through” or “Common Area Charges”.

Some examples of CAM Charges include:

Alarm Service
Carport Garage
Special Assessments
Fire Extinguishers
Fire Systems
Furniture and Fixtures
Service Contracts
Window Cleaning
Janitorial Supplies
Pest Control
Repairs and Maintenance
Security Patrol
Tree Trimming
Property Management Fees
Plant Service
Janitorial Labor
Graffiti removal

You may get the idea that virtually nothing is off the list.

What are the IRC Section 1031 Exchange date requirements?

There are two crucial time periods to be aware of in the Internal Revenue Section 1031 Exchange process; the Identification Period and the Exchange Period.

The Identification Period is the period in which the Exchanger must identify a replacement property(s) they propose to acquire. You can identify more than one property but generally no more than three. This time period is 45 days from the close of escrow on the relinquished property (“down- leg” property).

The Exchange Period is the time period in which the Exchanger must acquire title to one of the designated identified properties (“up-leg” property).  This period ends exactly on the 180th day after the close of escrow on the relinquished property. These deadlines may not be extended for any reason.

It is important to consult your tax professional, CPI, attorney and accommodator to facilitate any IRC Section 1031 Exchange.

Please contact us directly at mcknight@mcknightcre.com or (805) 689-6500 for any further information.