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Old 04-07-2010, 06:47 AM
 
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I have a friend expanding his small company to Houston, I think he wants to start small with 2-3 people and and expand over the next few years to 5-10. If he could find 1,000 sf in a nice building I think that would suit him. What are the common contract terms to be found here? I know it can vary from state to state.

Any help is appreciated. Thanks!
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Old 04-07-2010, 12:22 PM
 
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Does he have to be downtown? I would think it would be MUCH cheaper to find an office builing in one of the other parts of town, or even out in a suburb that he likes. Honestly, 1,000 sq ft is tiny, and I would think cost savings would be key in the short term.

One option to look at may be the pre-set up office spaces out there. You pay a fee and share an office work space with other small business people. There are shared services such as office equipment, conference rooms, lounge, etc. They also already have all the furniture. For 2-3 people, that may be the way to go rather than renting, building out a space, buying/renting furniture, etc.
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Old 04-07-2010, 12:24 PM
 
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I have seen listed on craigslist like $1500 to $2500 a month for downtown office space
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Old 04-07-2010, 12:31 PM
 
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Isn't there a lot of vacant office space downtown? Play a little hardball. An empty office doesn't make anyone any money.
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Old 04-07-2010, 05:14 PM
 
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Lots of empty spaces so haggle away. Try www.loopnet.com or www.har.com (click on commercial R.Est.). I disagree with going to suburbia to save some rent. Depending on thetype of business, but the most important factor is LOCATION for many types of business. If he's only going to need 1000sqft, then the rent saving is not that much. Ie, if downtown office is $2.25/sft and suburb is $1.75/sqft, then the rent savings is only $500. Had he needed 3000sqft, then the difference would be $1500, an amount worth considering. But again, I don't know what kind of business he runs, his gross, so it just all depends. The idea of office sharing is really good if it's applicable to his situation. Does he know about the triple net vs gross leases? If it's NNN, then the listed price is only the rent, but then he has to pay additionally for tax, maintenance, etc. Generally Gross leases are cheaper and you'd be in a nice high rise with dining and parking facilities and security.
Contract terms: They'll always try to get you in for as long as they can, ie 10 yrs plus 5yrs option to renew. Depending on his business and how certain he is that he'll succeed, I'm more in favor of a short term plus many options to renew , ie: 5yrs plus 5+5+5 options at predetermined rates. That way, if business is dismal, he's not in for the long haul. If business is great, he won't be forced out of the great location he found. Of course, the shorter the initial term, the less incentives they'll offer him such as finishout costs, free rent, etc.

I'd recommend using a good buyer's commercial real estate agent, unless he's familiar with the process. Ask for perks too, like buildout allowance, free rent for first 3-6mths, etc. If you're not going to use an agent, then at least use a lease lawyer who will get you the best deal and more importantly, not get you into trouble. Good time to get a business loan bc interest rates are low. Good luck!!

Last edited by houstonfan; 04-07-2010 at 05:23 PM..
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