Every commercial lease is challenging, but office leases are particularly complex. It’s crucial to have a seasoned broker guiding you every step of the way, but you, the tenant, should know what to expect. There are many different types of office properties: Traditional, Creative, Co-working, Executive, Medical and Flex. There are also three main categories that classify office space based on their condition, location and amenities, Class A, Class B, and Class C.
- Class A commercial properties are the fancy office buildings you see in the city. They are the skyscrapers with underground parking, workout facilities, game rooms, pet friendly play areas and the like. These are newer, nicer and have lush, well-manicured landscaping. As you may suspect, Class A office lease rates are at the high end of the price range. Working here feels like an experience and may include residential apartments/condominiums and retail/restaurant space as well.
- Class B office space is nice but often a bit older. They are typically located on the outskirts of town, in the suburbs or away from the downtown or city center. The lease rates here are mid-range in terms of price per square foot. While more affordable than Class A, Class B buildings are still desirable and include good amenities, tenants, and property management. Some sites in this category started out as Class A but age and upkeep have downgraded their classification.
- Class C space is, as you would expect, more affordable, and not in the nicest area. These properties work well for businesses on a budget and startups. The landscaping, facades and overall appearance may be a bit tired. Leasing a Class C property will keep more money in your bank account and may motivate you to ramp up your profits as quickly as possible so you can plan a move to nicer digs.
“The more a client knows about office leasing, the better it is for them.” Christine Juby from Davis Commercial AZ told us. “Beginning the site search with a wish list, the preferred location, and a basic understanding of what is needed once we find the right space, the smoother the entire process will be.”
Now that we know the different commercial property classifications, let’s dive into the details for some popular types of commercial office spaces: medical, flex, and creative.
No matter what type of space, it’s always important to select a qualified commercial tenant representative with the expertise to search for the office options that work best for you. They will protect you and be your advocate throughout the entire process. Tenants who peruse Loopnet or other online commercial real estate platforms and call the listing agent on the flyer need to understand that the landlord’s agent does not work for you! They are hired by the landlord and cannot have your best interest as their top priority.
Medical office space ranges from small single provider properties to multi-acre hospitals. For a startup doctor, dentist, nurse practitioner or naturopath, it’s important to understand the myriad of forms and red tape to navigate, such as business licensing, medical insurance, and registration. This should all be in place before seeking a location. Take the time to create a list of office site needs including:
- Rooms dedicated to Xrays, Surgery, IV Infusions, etc.
- Exam rooms, offices, and restrooms.
- Size of waiting room.
- Parking for employees and patients including a drop-off area if needed.
Regardless of what type of office you need, a seasoned commercial broker may send out a marketing blast outlining your criteria and desired location. She will ask the landlord’s rep all the right questions such as requesting a floor plan with dimensions, tenant improvement dollars available and other details about the space. Knowing these important facts up front will save you time and help you zero in on the right property for you.
Flex commercial space is all about makers. This is for industrial uses that need more office and showroom space and less warehouse. The remainder of the warehouse space often serves to manufacture and distribute the product. The only difference between flex space and industrial space is that the latter only has a small amount of office and is mostly for creating the product, staging, shipping, etc. A list of needs could include:
- A Yard that can accommodate workers, vehicles, or outdoor inventory storage.
- A Fenced/Secured site.
- High ceilings.
- Offices, break room, restrooms.
Creative office space typically appeals to, you guessed it… creative types. This includes but is not limited to marketing firms, architects, designers, tech firms and the like. These properties come in any class category and sometimes spring forth from an adaptive reuse of an outdated office building or factory. This type of office could work for any kind of company that loves collaboration and quirky layouts. Some trendy design features include:
- Open floor plans with exposed duct work and painted concrete flooring.
- Lots of places to hang out and brainstorm on cozy sectional sofas and lounge chairs sipping coffee from a fancy espresso machine.
- Kitchens with a fully stocked fridges, popcorn poppers, and cotton candy machines.
- Fun things to do while working long hours like shuffleboard, bags, and video games.
No matter what type of office space you need, or any commercial space for that matter, make sure you have your financial house in order before you begin. Know your credit score. Gather information including tax returns, bank statements and investment documents. If yours is a new venture, be prepared to sign a personal guarantee. Think about branding, marketing, social media campaigns and signage. Reach out to at least three recommended designers, architects, and contractors. These service providers often operate under one company as a design build firm. Understand the approximate number and sizes of rooms you will need. The more prepared you are the easier the process will be, and the faster you will be able to establish and grow your successful, profitable, rewarding business.
About Andrea Davis
Davis Commercial AZ is committed to helping our clients realize their commercial real estate vision for over 25 years of experience. We ensure a premier standard of services and client dedication is at the center of everything we do. We pride ourselves on working on your behalf to secure all possible incentives in this marketplace. Davis Commercial AZ is owned by Andrea Davis, CCIM, a respected industry leader whose breadth of knowledge stretches from developers to landlords to buyer/tenant representation and investments. Davis has won numerous awards, is in the top 10 category for Office Brokerage in Ranking Arizona and is a regular educational blogger for theBrokerList. Her book, SimpLEASEity™, neutralizes leasing fears and is the first in a series of commercial real estate guidebooks. Her next book, Simply Own It, the American Dream, is scheduled to be released in 2024. For more information visit www.daviscreaz.com.
About Christine Juby
Christine Juby is a licensed commercial real estate broker at Davis Commercial AZ. She has been actively involved in many facets of the commercial real estate industry for over 10 years. Her long history in commercial real estate began in Vancouver, British Columbia, Canada, where she worked in the mortgage and investments industry. Upon relocating to Arizona, she held various positions as an Office Manager and Property Manager where she managed buildings, negotiated contracts, performed building repairs, and worked closely with tenants.
Her hands-on experience and knowledge of the industry along with the impressive list of clients she has represented makes her one of the more knowledgeable brokers in the Valley. When Christine’s not helping her clients find the perfect commercial property for their business, you can find her traveling, gardening, hiking, or spending time with her three children and dogs.