Tenants evaluating only the rental rate when comparing a Class A building ($31/sf) to a Class B building ($28/sf) may be making an error much more costly than the 10% discount.
We believe you should determine the size of your new office as the first step in the renewal or relocation process.
And expanding your 10,000sf suite by four 120sf offices requires much more than 480sf!
Let’s break it down:
A “Circulation Factor” should be included for walkways/hallways and other common areas within a tenant’s suite, and it can add 30%-40% to the 480sf, increasing the additional size to 624-672sf.
An “Inefficiency Factor” represents the potential variance between a floor plan with the greatest efficiency and one with extra, unneeded space. For example, if you need four rooms 10’ wide, but the suite contains a 43’ wide space, either due to poor layout or design problems, then the extra 3’ represents the Inefficiency Factor. Generally, an Inefficiency Factor can add up to 5% more space, bringing our total to 656sf – 706sf.
A “Loss Factor” or “Add-on Factor” encompasses areas outside a tenant’s suite (building common areas) such as fire stairs, cafeterias, lobbies, utility closets, and basement/penthouse mechanical rooms. A typical Loss Factor increases the useable square footage by 15% – 25%.
Returning to our initial caveat: the difference between rental rates maybe 10% while the difference in total square footage of our four-office example can increase a 480sf four office expansion to 748sf – 893sf! That equates to a five-year rent of $115,940 -$138,880 based on the above-referenced Class A building.