Relocating your office is a monumental undertaking involving countless aspects, each carrying its share of expenses. The entire process can bring on stress, especially when you are operating within a set budget and have to maintain business operations during the transition.
Whether upgrading to a larger space or shifting locations for strategic reasons, it’s essential to understand the financial implications. As local office movers with experience in providing comprehensive moving solutions, we understand the complexities involved.
In this article, we’ll deep-dive into the costs associated with office relocation. We aim to give you insights to help you devise an effective moving strategy and allocate your resources sensibly. Let’s start demystifying your office relocation expenses!
What Are the Total Costs of Moving My Office?
It would help if you considered various costs when relocating an office. You should budget and plan for more than just rent to finish the lease, complete the build-out, and occupy your new office space.
We know that the first year can be costly. We are often asked for an “all in” list of costs incurred during the first year. This guide is intended to help clients prepare for the expenses they may encounter.
This article will tell you exactly what to consider when relocating your office, including:
- Rent & Operating Costs
- Security Deposit
- Legal Fees
- Costs of construction
Most office leases are quoted as triple net. You will be charged a base rental and estimated operating expenses for the entire year.
If you choose a gross lease (or full service), both these costs will be included in the rental price.
The base rent is usually the largest expense when calculating your leasing costs.
It is also the most expensive cost of your lease.
The base rent is the annual rental rate for each square foot. Multiply your rentable square foot rate by your per-square-foot rate to find your annual rental rates.
If you rent 2,500 square feet at a base rent of $40 N per year, your base rent is $100,000. (2,500 RSF * $40.00 = 100,000).
You should also know that your annual base rent can increase based on a dollar value or a percentage. Your lease agreement will detail this and should be included in your cost analysis.
Your tenant representation broker can negotiate a “free rent” or abated rent in your lease agreement.
You won’t have to pay any base rent during the free period. You won’t have to pay base rent during your free rent period. However, operating costs and other costs will be your responsibility (unless it is specifically stated that the free rent includes gross free rent).
Your free rent period will usually be a certain number of months when you begin your lease.
A landlord may give you a free month of rent to offset other costs incurred during your move.
The operating expenses of the office space you rent will consist of three main components.
- Common Area Maintenance (CAM) expenses
The operating costs are also calculated square-foot-per-year. Add the base rent to your operating costs, and multiply that by your rentable sq. feet.
Total annual rent cost = (Base Rent + Operational Expenses x Square Footage)
This maintenance cost is not included in your operating costs, and you must pay it directly.
The cost of this type is rare in office buildings, but it can be found in industrial or flex spaces.
Equipment that uses more electricity than “average” usage will be metered separately and billed to you as a separate expense.
This category includes supplemental HVAC systems for server rooms or electricity for uninterruptible power supplies. The lease or work letter lists the equipment the landlord requires to be submetered.
A security deposit is required when signing a lease for a commercial property.
Security deposits can vary depending on the circumstances, it’s common for landlords to ask for a deposit equivalent to one month of gross rent.
The security deposit your landlord requires can vary depending on the market, creditworthiness, and TI allowance.
A cash deposit is usually the minimum security amount required. However, it is common for landlords to ask for an additional letter of credit, a personal guarantee, or a corporate guarantee.
The number of parking spaces for office buildings is usually expressed as a percentage of 1,000 square feet.
A 100,000-square-foot building with 300 parking spaces would have a parking ratio 3:1000.
The landlord will allocate you nine parking spaces if you lease 3,000 square feet of space within a building.
You can expect to pay extra for parking in the urban offices.
You should have an attorney review the lease contract and its terms and conditions, just as with any other legal document.
The price of your attorney’s review will depend on the time it takes to complete your contract.
If you don’t lease a “spec” suite (a space built based on the landlord’s plan), you will likely need to renovate it to fit your requirements.
It may only be a matter of changing the carpet and paint in a space that is a second generation, or it could require more serious construction, including millwork, plumbing, and other features.
The landlord usually provides a tenant improvements (TI) allowance as part of the lease. The landlord will give you a TI allowance based on your lease term, your credit with the tenant, and the rent you agreed to. This money is to help you improve your office.
In a highly competitive market, your tenant representative broker will negotiate the project amount with the landlord.
If, for example, the landlord offers you $50.00 per sq. ft. of TI allowance, but your project budget totals $150 per sq. ft., you’ll have to pay an additional $100 per sq. ft. out of pocket.
The TI allowance can only be used for a construction project’s soft and hard costs, such as framing, HVAC, doors, windows, or architectural fees.
The TI allowance will not cover moving costs, data cabling, furniture, fixtures, and equipment (FF&E) unless mentioned in the lease agreement or the work letter. You must budget separately for these items if they are not mentioned in the lease or work letter.
When evaluating the space, a project manager can assist you in estimating these costs as part of your initial project budget.
Furniture, Fixtures, and Equipment
FF&E is a major component of the total cost of moving into a new location.
It is difficult to determine the exact cost since it depends on many factors, including preferences, office size, and density.
Data Cabling & Technology
The cost of installing data cabling in your office can be high.
Data cabling is required for standard data systems. Each employee requires two connection points (one for the phone and one for the internet), plus an additional dozen drops or more for workrooms, meeting rooms, etc.
Each drop costs between $125 and $200. A company with 50 employees can expect to spend between $14,000 to $25,000.
You will also need to include your phone and Internet expenses. It will also include physical equipment, such as Wireless Access Points, phones, servers, and so on, and the monthly service fee, which can differ depending on your internet provider and service level. You typically sign a multiyear contract with vendors such as Spectrum AT&T, Google Fiber, etc.
Plan for the printers and copier your business will require. These are usually leased and require a monthly lease fee and an initial delivery fee.
You’ll need to hire a few vendors to manage, design, and finish your build-out.
Your vendor list could include the following:
- Project Manager
- Interior Designer
- General Contractors (and Subcontractors)
These vendors charge a percentage of your project costs. Their fees will therefore vary depending on the scope of your project.
As a reference, your architect, engineer, and project manager typically charge between 8 and 12 percent of the total cost of your project, while your managed costs are usually between 3 and 5 percent. However, a good project manager can save you more money on your project.
Remember to include the costs of moving into your new office.
Budget between $1.50 and $2.00 per square foot based on how much space you occupy now.
You should budget between $5,000 and $7500 for a 5,000-square-foot office.
The cost of moving will usually include the assembly and disassembly of furniture. If your furniture is difficult to set up, budget for a higher price.
This estimate excludes services such as TV mounting, hanging artwork, whiteboard mounting, etc. These services are usually available on an a-la-carte basis.
You may also engage other vendors depending on the project or business requirements. Signage for your office lobby may be included, artwork in the office, security systems, and other items.
Your project manager can assist you in determining which vendors you need to hire and estimate the costs.
Budgeting for the First Year After Leasing an Office Space
Here’s how you can estimate your costs.
|[(Base Rent + Op/Ex) * RSF]|
|– Free Rent|
|Monthly Base Rent * # of Months of Free Rent|
|+ Equipment Maintenance|
|+ Submetered Power|
|+ Security Deposit|
|+/- 1 Month Gross Rent|
|+ Parking Fees|
|Parking Rate * # of Spots * 12 Months|
|+ Legal Fees|
|To be negotiated with your legal team|
|+ Build-Out Costs|
|Hard & Soft Costs (that exceed TI Allowance)|
|To be estimated by your project manager|
|+ Data Cabling, WiFi & Technology|
|Typically both an installation/set up fee and a monthly rate|
|+ Vendor Costs|
|Typically a percentage of your project cost|
|+ Moving Costs|
|Est. $1.00 – $1.50/SF + any à la carte services|
|+ Additional Costs|
|Total Year 1 Real Estate Expenses|
These fees are often one-time upfront costs that do not occur again during the lease term. You should expect to continue paying for the following costs each year:
- Base Rent
- Operating Expenses
- Maintenance of Equipment
- Submetered power
- Parking fees
- WiFi & Technology Monthly payments (plus any fees for renewal if your contract does not cover the entire term of the lease)
- The Security of Your Own Home
Understanding every element of the costs when relocating your office can feel like a mammoth task. Still, proper knowledge about these expenses can pave the way for a smoother transition. From identifying your base rent to the intricate details of construction costs, this guide has clarified what you can expect when planning a move.
Choosing reliable movers in Queens, such as Abreu Movers Queens, can alleviate the potentially stressful experience of office relocation. Our experts offer comprehensive and professional moving services to keep your transition efficient and hassle-free.
Don’t settle for any mover to navigate your next big move; opt for the best. Contact Abreu Movers Queens today; let us take on the intricacies of your office relocation while you concentrate on your business operations. Trust us to bring reliability, professionalism, and care to your moving needs!
Eric Chandler is a versatile entrepreneur with expertise in both writing and the moving industry. With years of experience as a writer, he has a talent for crafting engaging content on various subjects for major publications and online platforms. Eric also owns a successful moving company that provides reliable and efficient services to clients across the country. His extensive knowledge of the moving process, from packing to delivery, has earned him a reputation as a trustworthy moving expert.