Whether leasing office space for the first time or moving to a new location, the process of assessing space needs, creating a budget, touring space, and moving can be daunting. One of the elements that makes leasing space so challenging is that there is no universal lease, nor standard building. The good news is that even though the particulars of the leasing journey will differ for every tenant, the general path each must follow is very similar.

Below, we’ve summarized five major steps in the leasing process. Those steps include:

1. Understand Leasing Process.
2. Assess your space needs.
3. Develop a budget.
4. Select a location and a building.
5. Move in!

1. Understand Leasing Process

By understanding the steps in the process and how much time each can take, you can set realistic expectations about the amount of lead time required for you to procure a new location. Small blocks of 500 square feet may take a few weeks to button down, but larger blocks of 5,000 square feet or more may require months to secure and build out to your company’s specifications.

There are a few critical activities to carry out during the early stage of the search. For the most part, these tasks involve time, focus and organization rather than an outlay of cash. They can be completed concurrently and will take between one to six months to complete.

Be clear about why or if your firm needs a space.

A company’s stage of life is often a good guide for determining why, or even if, a company needs a space. A nascent business looking to move out of the founder’s house might consider a coworking or executive suite arrangement. An established business may be growing, so a larger office suite or an additional office in a different location might make sense.

Core Activities

Understanding the needs of the key people involved with your business is very important. So, determining if there is a client base you need to be close to or if employee commuting patterns are a priority is a good place to start. Do you want to be located close to public transit or major highways? These are just some of the considerations you will need to attend to when assessing locations and buildings.

2. Assess Your Space Needs

Figuring out how much space to lease and how the office will be laid out is an important early step in the process. To get started, conducting a back-of-the-napkin calculation can help you generate a reasonable estimate. To accomplish this, multiply the number of employees you need to accommodate by the average number of square feet per worker in the U.S. According to CoStar, this figure currently sits at around 190 square feet for an office use.

So, if you have 6 employees that will each need their own desk or office, you will likely need 1,140 square feet. This figure will rise or fall depending on a host of factors, such as conference rooms or a kitchen that your firm may require; if you will need more offices than cubicles; if you will create a reception area; the column spacing and window line of the buildings you are considering, etc.

3. Develop a Budget

Understanding how much you can afford to pay in rent is critical. Here again, a back-of-the-napkin calculation can help generate a decent approximation. Continuing with the example above, if you lease 1,140 square feet and pay $22 per square foot per year in rent, your monthly rent will be $2,090.

Concerning the $22-per-square-foot figure, you will need to be clear about whether a space is being offered on a full-service or a triple-net basis. The former means that all taxes, utilities and management fees are included in the rent and the latter indicates that you will pay for those expenses in addition to the $22 rent figure. We offer both, depending on the building. Also, those operating expenses can vary widely, anywhere from about 5% to 25% of the base rent.

Remember, if you are looking at a space with a NNN asking rent, you have to factor in all of these additional costs to “gross up” the rent to be equivalent to the other asking office rent types: “net of electricity” or “full service gross.”

Spaces that generally quote by a “net of electricity” and “full service gross” amount include the NNN base rent, plus the operating expenses and janitorial services. The only difference in a “net of electricity” lease is that the tenant pays separately for electricity. Universally, rents quoted on a net of electricity or full service gross basis are more expensive on the surface, but since they include all of the additional cost elements, they may not be as expensive overall relative to a NNN equivalent.

Key Categories to Budget for Early

For overall context, here’s a list of the major upfront expense items to consider when searching for a space. They are organized into three broad categories: lease-related expenses, construction-related expenses and move-related expenses.

Lease-related expenses

• First month’s rent.
• Security deposit (refundable).

Construction-related expenses

• Construction costs.
• Construction management fees.
• Permitting fees.

Move-related expenses

• New furniture.
• Equipment (new and/or relocation of existing).
• Signage.

4. Select a location and a building.

In addition to considering where your employees live, you will also want to evaluate where your customers are located. This factor will be particularly crucial for customer-facing organizations, such as retail or medical tenants, but it will also notably impact professional services tenants, including hair salons or . This element also needs to be appraised in reverse; perhaps your company doesn’t host its clients very often, but your employees frequently visit their customers. As with your employees, conducting an analysis of customer zip code information can reveal the most convenient locations for your business from a client perspective.

Flexibility

Commercial leases typically cover long periods of time. During that kind of interval, a lot can change for your business. For this reason, we offer greater flexibility than most companies, flexibility that can be critical when evaluating a potential property. You’ll want to be assured that you’ll have the ability to grow or adapt.

5. Move in!

Notifying clients, filing certificates of occupancy, determining what furniture to keep, purging old files and ensuring that the lights are on at the new office location are all components of a business move. This is the last step in the process after searching, touring, calculating costs, and possibly constructing. While the steps involved in moving may seem intuitive, it is important to plan for the move and set expectations, especially among any employees. Being prepared for each phase of the process will ensure you are open for business in your new location.

Visitors to Dallas quickly hear about the Bishop Arts District, an espresso-and-hip-boutique retail area located in rough (but gentrifying) Oak Cliff. What they’re usually not expecting to find when visiting the neighborhood is a building called Tyler Station, a 100,000-square foot remake of the former Dixie Wax Paper factory. The site houses some 70 small businesses in what Southern Dallas County developer and human connector, Monte Anderson, calls “a collaborative village.” It’s a prime example of what’s known as incremental development.

Colliding for shared prosperity

Artists, makers, and entrepreneurs productively “collide” here — as Anderson likes to put it — in dizzying variety: A co-working space (Wax Space); a martial arts studio (Oak Cliff Aikikai); Oak Cliff Brewing; Crumb & Kettle bakery; a barber shop; a tea store (Zakti); tattoo studios; and an event space (Place at Tyler). “We also had a hippie Baptist church for a while,” he notes, “and now we have the studio of an African American author of what she calls ‘gangster love’ novels — over 100 of them.”

Inside is a vast, high-ceilinged honeycomb of retail spaces constructed with repurposed wood and metal cattle panels so as to allow visitors to look in or chat with a business owner. It’s a large and inviting space. Many colorful events have been held including a Juneteenth Festival, a diaper party, grand openings, Origami Saturday, The Color of Ideas lecture series, community meetings, and much more. Inside is a vast, high-ceilinged honeycomb of retail spaces constructed with repurposed wood and metal cattle panels so as to allow visitors to look in or chat with a business owner. It’s a large and inviting space. Many colorful events have been held including a Juneteenth Festival, a diaper party, grand openings, Origami Saturday, The Color of Ideas lecture series, community meetings, and much more.

“This is not about real estate”

Another thing you notice: Quite a few of the tenants Anderson signs up are small, often minority-owned enterprises launched by people from the immediate area — and on shoestring budgets. As he describes the grassroots feel of Tyler Station, he pauses to add, “You get that this is not about real estate, right?”

A native of Southern Dallas County himself, Anderson is the founding and past president of the North Texas chapter of the Congress for New Urbanism, and a co-founder of the Incremental Development Alliance, a non-profit aimed at coaching small-scale, “missing middle” housing developers and an advocate of resident-driven neighborhood development. He is also a former motocross racer who barely made it through high school, as well as a remarkable social entrepreneur. His numerous real estate developments include a boutique hotel which was key in sparking the Oak Cliff comeback story. 

Making it affordable for low-income tenants

Anderson explains, “Tyler Station is just like what we’re going through now nationally with converting all the big box places, the office centers. We have to figure out how to scale down the rent to a point which is low enough for the area, while still high enough per square foot to make the project sustainable.” Which for Anderson means without subsidies and all the usual strings attached.

“We bought Tyler Station in 2016 for cheap — nobody wanted it. There was environmental contamination, it needed a $750,000 roof, it was full of smokestack equipment and dead raccoons.”

About that time, he decided to partner with Stash Design, a successful studio which specializes in sourcing found and salvaged objects for clients wanting a green-but-stylish look. Taking 20,000 square feet, Stash Design became the project’s anchor tenant and minority partner.

An emergent marketing plan

Yet, the partners did not go into the project with a clear marketing plan. “I thought we would put in a bunch of industrial users, a bunch of makers. But that’s not who showed up,” Anderson says. “It’s like when you’re first cleaning out the building, and then the more you see, the more your ideas change. We just wanted to let the building tell us what it wanted to be.”

He takes his hands-on approach a step further. “I want to teach people how to fish, as they say — but to do that, you have to spend time with them. I work mostly with the folks who are trying to scrape up $250 a month. I let my staff handle the regular business conversations back in the office. Where I’m needed is out in the trenches, feeling it, tasting it. For me, success is watching other people learn to do things — making it their own.”

“Farm where you are”

Toward that goal, Anderson is known for making personal low-interest or interest-free loans to entrepreneurs and cutting deals on the rent. “Here’s an important thing — the majority of our tenants are close by here and from southern Dallas, which has some of the poorest neighborhoods in the country. This is exactly what we wanted to see. We wanted to impact the immediate area first, to give them opportunities.”

Translating that goal of localism into a phrase, Anderson simply advises. “Farm where you are.”

SOUTH BEND — With his hand, Mike Keen brushed flaking paint from a column of pearly white ceramic “subway tiles,” saying, “This can’t rot.”

But, below his feet, the original oak floor had already rotted and been removed, thanks to a roughly 6,000-square-foot hole in the roof that had let rain and snow collect inside of this vacant former bakery at 906-910 Portage Ave., just over a half mile from downtown.

Sprawling piles of garbage were removed this year. Keen could now see across 56,000 square feet of often dark, dank, open floors. He saw past the puddles and mildewed arcade games littered in the basement.

Those tiled walls could become part of the new storefronts on Portage. Windows could again appear in their bricked-in spaces of the historic former Ward Baking Co.

“We’re really trying to create life on the street,” said Keen, managing partner of a group whose goal is to turn this into a nest for up to 60 businesses, artists or organizations in three years.  

At an estimated total cost of $3.75 million, the development’s biggest challenge now, Keen said, is finding the bank financing and the first possible tenants “when this is the best that it has looked in a decade.” 

“You have to have the vision and the patience to see that, in the beginning, you’re going to have almost no impact,” he said.  

Banks, he said, like to feel confident that such a project would land tenants. That may be easier for buildings designed for just two or three tenants, but that wouldn’t fit the vision of what Keen and his project partners aim to do. They want to draw together a collection of small and larger enterprises that could feed off each other and bring life to a previously stagnant area that Keen calls Portage Midtown. 

Across Portage, there are homes that he’s renovated and two 600-square-foot “tiny houses” that he and partners built this spring (with hopes for more in adjacent lots), plus the weekly South Bend Bike Garage co-op that bustles with volunteers each Wednesday evening. It’s all a few steps from the Near Northwest Neighborhood Center and its coffee shop.  

Keen, a retired IU South Bend professor who lives nearby on Riverside Drive, joined his Ward project partners in an LLC they call The Bakery Group: local architect Greg Kil, Borkholder Buildings owner Dwayne Borkholder of Nappanee and Dallas real estate developer Monte Anderson.  

They began cleanup and roof repairs in February. Keen hopes that, if the windows and storefront doors can be installed early in the process, they’ll inspire banks and the public to see how engaging the structure could be. 

The city has discussed allocating tax incremental finance dollars to help with the windows and doors along with other ideas, such as an outdoor plaza here and improvements elsewhere in Portage Midtown, said Santiago Garces, the city’s executive director of community investment. 

Garces said the city is looking at this and other corridors and how to “reactivate” such neglected mid-town spaces so that they draw people from their neighborhoods and even from the region. 

Keen said The Bakery Group’s goal is to repair the building enough so that, in the first year, it could gain an occupancy permit and move in 10 to 15 tenants — or about 30% occupancy — then 70% in the second year and 100% in the third year.

They would build it out one section at a time, structuring it according to what the tenants want, he said.  

Initially, Keen wanted to knock the Ward building down so that there’d be eight vacant lots to develop or build homes, but Anderson convinced him otherwise and offered to become a project partner.  

“Monte said this was too beautiful of a building,” Keen recalled.  

It reminded Anderson of Tyler Station in Dallas, a former wax paper factory, built in 1925 next to a train station, that he turned into a co-working space, now filled with a brewery, fabricators, retail shops, artisans, attorneys, churches, filmmakers, martial arts, wellness instructors and others.  

Representatives from co-working/entrepreneur centers gathered recently to describe their progress, strategies, and aspirations for Southern Dallas.

If capitalism could be reconfigured to allow neighbors to become owners of their own unique businesses, what would it look like?

That question is being answered in Southern Dallas, where six co-working/entrepreneur centers are in varying stages of development.

Representatives from the Red Bird Entrepreneur Center, Impact House, GoodWork, the Fair Park Entrepreneur Center (The District), Tyler Station, and the Grow DeSoto Business Incubator gathered on June 15 to describe their progress, strategies, and their aspirations for Southern Dallas.