Offices guides
Commercial Real Estate: A Quick Breakdown
What is commercial real estate, and why does it matter? Read this guide to find out what it is, how it affects your office search, and what you should keep in mind as you venture into the world of commercial office space.
What is commercial real estate?
Commercial real estate refers to any property that is used for business purposes, such as offices, retail stores, warehouses, and industrial buildings.
In the context of office spaces, commercial real estate includes buildings or properties that are designed and leased specifically for office use. These spaces can range from small, shared coworking spaces to large, multi-story office buildings with hundreds of tenants.
Commercial real estate plays a vital role in the economy by providing businesses with the physical space they need to operate and grow. And, in recent years, leasing models have become increasingly popular for office spaces, making it easier for companies to find the right fit. When calculating the rent for business premises, there are several factors to consider, including the location, size, and changes to the space over time.
What are the different types of commercial real estate offices?
Independent Spaces
These refer to an entirely independent and private space for you and your team. These are private, self-contained spaces designed for one organization.
Serviced office
A private space but with shared common areas, usually in a larger building. They offer the convenience of a fully equipped workspace without the commitment and expense of a traditional office lease.
Open Spaces
Hot desks or individual workspaces in a shared space. Coworking falls under this category. They typically offer flexible leases and a range of amenities.
Office Sublet
When a tenant leases their office space to another party. This allows the original tenant to offset their rental costs while giving the subtenant the opportunity to rent space in a desirable location without having to sign a long-term lease.
What are the types of contracts in commercial real estate offices?
Commercial real estate contracts come in different types, and it`s important for businesses to understand the differences to make an informed decision.
Classic contracts
This is the most common type of office lease. It typically requires a long-term commitment (e.g., several years) and may involve the tenant paying for additional expenses such as utilities, property taxes, and maintenance costs.
Flexible contracts
This type of lease is becoming more popular as businesses seek flexibility, and allows tenants to rent office space for shorter periods, usually on a month-to-month or annual basis. They include all of the costs associated with the space, such as utilities and maintenance.
What are the advantages of renting commercial office space?
Flexible office spaces allow businesses to adapt quickly to changing circumstances. Whether you need to expand your team, downsize, or relocate, flexible arrangements provide the agility to adjust your office space accordingly. You can easily scale up or down as per your requirements without being tied down to long-term leases.
Secondly, a lot of flexible contracts come with inclusive pricing models, where utilities, maintenance, and other amenities are bundled into a single monthly fee. It eliminates the need for separate contracts and additional expenses, and you can often move in quickly and start working without the hassle of setting up utilities and worrying about furniture.
Office providers like Setting also make it even more flexible and convenient for you. With flexible terms and conditions, renting allows you to focus on your core business needs and not have to worry about operating an office space like you would have to if you would own a space.
Frequently Asked Questions
What is the difference between an independent space and an open space?
An independent space is a separate, enclosed office or workspace that provides privacy and individuality to the company. On the other hand, an open space is a large shared area that has no partitions or barriers, where multiple people can work together in the same space. Open spaces are often used in coworking arrangements or in collaborative work environments, while independent spaces are more commonly found in traditional office setups.
How is rent calculated for office space?
Rent for office space is typically calculated on a per-square-meter basis. This means that the total square meters of the space is multiplied by the rental rate per square meter to determine the monthly or yearly rent. Additional fees may also be included, such as common area maintenance (CAM) fees or property taxes. Read our pricing guide for more information.
Can I customize An office space to fit my needs?
Many landlords will allow tenants to customize the office space to some extent, such as painting the walls or adding partitions. However, any modifications must typically be approved by the landlord and may require the tenant to return the space to its original condition at the end of the lease term. Read our architecture/design guide for more information!
What is the difference between leasing and renting commercial real estate?
Leasing involves a long-term contractual agreement between a landlord and tenant for a specified period, usually one year or more. Rental agreements are typically for a shorter duration, often month-to-month, and offer more flexibility. Leases offer more customization options but are usually more expensive, while rental agreements may have more standardized terms.
How do landlords typically calculate the square footage of an office space?
Landlords typically calculate the square meters of an office space by measuring the interior space of the unit, including walls and hallways. This measurement is known as the "rentable" square meters, and may include common areas such as lobbies, restrooms, and elevators. However, tenants are only charged rent based on the actual "usable" square meters of their individual unit.
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