Oil Costs Impact More Than Gas Prices

The cost of oil is hitting consumers in many more places than the gas budget. In fact, the geyser-like spike in the cost of crude ($109 as of 3/12/08) will affect the way landlords operate their buildings and negotiate leases. As a user of commercial office space, you need to be prepared for what lies ahead.

For starters, full service leases may not be as commonplace because landlords will want to avoid covering utility expenses. Or, if a full service lease is available, negotiations will be more of a struggle, particularly when it comes to capping operating expense pass throughs. If possible, landlords may try to cut back on certain services within your building or otherwise reduce variable utility expenses.

Additionally, the costs for repairs and maintenance may increase as a result of the increase in energy costs, which could then increase expense pass-throughs. Landlords may also start dusting off their leases to see just who should be paying for those hours of extra HVAC on the weekends or late nights. Fit-up allowances and other lease incentives may too dwindle as landlords tighten their money belts.

In some cases, working with a landlord in these economic conditions can have its benefits. Should your company be on the verge of an expansion need, you may find adjacent space in your building easy to absorb, as landlords become nervous about holding out for new tenants in a slowing economy. However, if you need to go the other way and give back some space, don't expect an affordable resolution in a time like this.

While individual companies cannot change international oil prices or the impact on our economy, the key is to make the most of the situation. Use the economic slow-down to your advantage when negotiating with hungry landlords. However, be aware of the pressures on your landlord or other prospective landlords when negotiating a lease or enforcing existing terms. Your tenant rep can help.

Does Your New Space Measure Up?

Countless businesses can share expensive stories of at one time paying for more space than they actually occupied. That is why confirming the true square footage of your space is one of the most critical steps you should take before signing a lease or purchasing a building.

Think knowing every inch of your floorspace isn't that important? The Building Owners and Managers Association (BOMA), an international organization that advocates and regulates standards for the construction and facility management industries, established its "Standard Method of Measuring Floor Area in Office Buildings" in 1915. Property managers often rely on this standard as an industry mainstay for how to determine rentable space in a leased property.

Sticking to a standard isn't always easy. In fact, inexperienced landlords may neglect current BOMA's industry standards altogether, opting instead for their own method, on which you could have no basis to challenge. Additionally, the hard numbers assigned to a per square foot cost can often distract tenants from the underlying driver of their monthly cost - the actual size of the space itself. Therefore, keep the big picture in mind by not negotiating dollars until you have negotiated inches.

Measurement mishaps are not always deliberate but in some cases, many property managers may still quote the size of a space as if the building just opened, neglecting the fact that several feet were lopped off of your new conference room to accommodate a larger server for the tenant next door. Is that storage alcove 24 rentable square feet or only 18? A few feet here and there can really add up.

An inch of prevention can equal countless square feet of cure. Your tenant rep can help you understand the different techniques for measurement and also face the landlord or seller when its time to discuss a reduction in the proposed cost of your occupancy.

It Is Easy Being Green

While buildings across America aim for LEED certification and green construction gains momentum, the vast majority of our nation's office space will be unable to reach the sustainability standards being set today. However, that doesn't mean you can't make your office a greener place in which to work.

If properly pitched, you may find your property manager more than amenable to the installation of motion-sensing light switches. Try sound quality enhancements to eliminate noise pollution in your office. White noise machines or even quiet music can do wonders to sooth the din emanating from nearby cubicles and copy rooms.

If you are having space renovated, choose environmentally friendly floor coverings and paints. Anyone who has ever removed old carpet can attest to the dust and particles that are captured over the years. Additionally, interior paint is made much less toxic than in years past, and many brands offer green alternatives.

If you have cleaning supplies or other chemical agents within the office, ask the landlord to secure them in an area away from the central core of employees to avoid fumes or spills in public areas.

Most importantly, insist on an office with very good ventilation. Moisture build-up and stagnant airflow are central contributors to sick buildings. Indoor air quality has become a major issue for many facility managers. If your landlord won't provide an assessment, consider hiring a facility consultant to assist you in analyzing your space's air quality.