Compared To Direct Lease

Executive Space or Direct Lease?

How much do you know about configuring new phone service? Are you ready to measure out space and select furniture? Should you purchase or lease a PBX system for your telecom needs – and should it be analog or digital? When you set up your wireless internet, is it better to go with WEP or WPA passwords? These are just a few of the hundreds of questions you’ll need to answer as you go through the process of selecting and configuring traditional office space through a direct lease. Selecting traditional office space for direct lease is just one-third of the process: negotiating the lease itself in a manner that is legally advantageous to your needs is step two…and then configuring and setting up the office is step three.
 
Just on the basis of time and risk alone, many small organizations quickly realize that planning for new office space through a traditional direct lease is complicated, time-consuming and in many respects very risky. In addition, the economics don’t favor the tenant in most situations with a direct lease. The landlord’s objective is to sell large pieces of space for long periods of time, whereas chances are you need a small piece of space for a short period of time, or at least for a period of time that comes with options for expansion. As a result, small tenants often pay a disproportionately high rate in order to achieve shorter terms, or have to accept longer lease terms to cover the costs of space fit-out incurred by the landlord.
 
With executive space, you gain in five ways when compared to a traditional lease. First, the fit-out and furnishing of the space is completed for you. Second, you can secure a short term and multiple options for possible growth up-front. Third, the service agreement is much simpler than a traditional lease with lower risk to you. Fourth, the cost of common areas in the building and within the space are covered by multiple parties, not just your business. And fifth, you have professional management of your space available at all times. For smaller organizations in the Washington DC office market, there really is no better option than executive space.

 

Here are a few questions we recommend you considering before you enter into a Direct Lease:

  1. Have you ever negotiated a lease for office space?
  2. Are you working with a commercial real estate broker?
  3. Has your broker quoted the square footage rate as a triple net or gross square footage lease?
  4. What happens if you require more space during the term of your lease?
  5. Do you understand that you could be assessed annual maintenance costs and real estate taxes in addition to the square footage costs?
  6. What are your options if you need to downsize during the lease?
  7. Do you have an alternative plan should the lease negotiations and build out take longer than anticipated?
  8. What build out allowance have you been given?
  9. How much of a security deposit are you required to post?
  10. Have you begun your technology (phones/internet/server/pbx) requirement search?
  11. Have you decided whether to purchase or lease your technology equipment?
  12. What arrangements have been made regarding local/long distance telephone service?
  13. What computer system will you be using in your new office?
  14. What type of IT infrastructure are you considering?  T-1, DSL?
  15. What are the costs associated with the installation and maintenance of IT infrastructure?
  16. Will you purchase or lease your computer system?
  17. Who will be installing your computer system and what time frame are they able to provide you?
  18. Have you chosen an Internet provider?
  19. What costs are associated with the installation and maintenance contract for your Internet service?
  20. What costs are associated with IT network administration per year?
  21. What arrangements have you made for office management and administrative support?
  22. Have you decided to buy or lease office furniture?

As you can see, there are numerous costs and tasks associated with securing office space with a Direct Lease.  If you're not a Fortune 500 company with an abundance of resources, the process can be overbearing.  With Executive Space, you will save time and money, allowing you to focus on your core business instead of setting up your office.

Office Options Compared:

Direct Lease vs. Executive Space

Requirement Direct Lease Executive Space
Professional address Challenging to find best location Standard
Flexible terms Difficult to obtain and negotiate Standard
Tenant fit-out Must negotiate, extend term Standard
Procure furnishings Costly and time-consuming Standard
Arrange security Technically challenging Standard
Cleaning services Costly for small space Standard
Telecom/Internet Must set up and configure Standard
Conference space Extremely costly Standard
Expansion options Renegotiate or move Available
Support services Separate labor and hiring cost Available
Time to move-in At least 30 days, often 90-120 Instant

Let our team help you determine the best strategy to move forward.  Click here to learn how!