Common Operating Costs as a Commercial Tenant

Posted on October 12, 2020 by bafcorp20

Whether you are preparing to perform a routine audit of your commercial lease portfolio, or considering a list of potential office spaces for rent, rent is not the only operating cost to review. Aside from rent, there are many other types of operating costs for a rented commercial space. Continue reading to learn some of the most common operating costs you can expect as a commercial tenant, as well as, where to get trusted advice regarding tenant improvements.

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The Cost of Rent

You can certainly expect to pay rent for your commercial space, but also expect this expense to be the bulk of your total operating costs. Review your base rent cost, then follow up by reviewing how that cost might evolve or increase overtime. Be prepared to learn that your lease allows the commercial landlord to increase rent at their discretion, as many commercial leases do. However, in such cases, the rate at which the rent will increase, and by how much, is usually defined in the lease agreement from the start. There are likely set caps on how high the rent can get. Variable indicators, like the Consumer Price Index, might also influence a landlord’s method of rent changes.

Property Taxes

Taxes are an obvious cost for a commercial tenant, and for anyone working in the country for that matter. In your commercial agreement, the portion of property taxes paid might be with a single, double, or triple net lease. Furthermore, property tax reassessments can result in sudden and unexpected operating cost increases. Talk to your landlord when reviewing your lease, and ask whether or not the property has been assessed recently, or if any assessment is in the books.

Insurance Coverage

General liability insurance might also be an obvious operating expense for a commercial tenant, but there is more to consider when reviewing your lease. For instance, if you have a double or triple net lease, you must pay for a portion of the landlord’s property insurance. When renegotiating your liability insurance premiums, be sure you understand that your space’s location will have an impact.

Utility Costs

Like any other modern building or space, it will require the use of electricity, running water, heating and air conditioning, and many other modern utilities. So, you can expect to pay utility costs on a routine basis, unless you have a gross or full-service lease. Talk to your trusted Indianapolis commercial general contracting company to learn how you can keep utility costs down by incorporating more sustainable infrastructure, operations, and technology.

Miscellaneous Fees

Your landlord might require their commercial tenants to be responsible for paying certain miscellaneous property fees, separate from rent and utilities. Some examples of such fees include parking fees, permits, property facility maintenance, exterior sign displays, a possibly even a hidden repayment of rent abatement. Also, some landlords will offer first months’ rent free, but then require that month’s rent to be repaid by the end of the year. Watch out for this too when reviewing your lease agreement.

General Maintenance and Upkeep

Commercial tenants are generally responsible for maintaining the property on their own dime. This commonly includes expenses like facility maintenance, custodial services, indoor plant care, garbage and recycling, minor repairs, landscaping service, snow removal, and security. Be sure to look for these fees in your commercial lease, and discuss who is responsible for paying what when the time comes. Also be sure to discuss your TI allowance with your landlord, and perhaps plan a needed tenant improvements or remodels for your commercial space or building.

Office Renovations and TI Improvements in Indianapolis, Indiana

Contact BAF Corporation at 317-253-0531 for trusted office and commercial-use construction services in Indianapolis, Indiana and its surrounding locations. Our skilled and experienced commercial general contractors are certified specialists in tenant improvements, office remodels, and commercial-use construction services. Whether you are launching, expanding, renovating, or relocating an office or professional space, our commercial construction and building contractors have the qualified expertise, first-class resources, and latest technologies to support your business’s objectives and generate long-term value. We serve all corporate, commercial, and industrial.

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Frequently Asked Questions About Commercial Interior Build Outs

Posted on August 27, 2020 by bafcorp20

Business and facility owners experience change as the years progress and the economy evolves. After so much time, many find themselves in need of a brick and mortar, new location, or new look. Either way, in comes the commercial interior build-out. Continue reading to review some of the most frequently asked questions about interior build-outs, including how they can benefit your business’s overall success and where to get started with a trusted bid in Indianapolis.

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Commercial Interior Build-Out FAQS

What is a Commercial Interior Build-Out?

A commercial interior build-out can mislead business owners since they are often referred to as commercial tenant improvements (TI’s) or leaseholder improvements. Commercial tenant improvements and remodels are generally needed in almost all cases of a business needing new space since most commercial offices and units are not set up to meet the exact needs of a particular company. In fact, this is exactly what a commercial interior build-out is: a commercial construction remodel to an existing space to customize it structurally and culturally to the business’s unique needs.

Do Tenants or Landlords Pay for a Commercial Interior Build Out?

There is always some confusion with who pays for what when it comes to commercial tenant improvements and remodels. Generally, the landlord and tenant can choose how they want to arrange the financial liability for a commercial interior build-out. Among the possible arrangements, examples include:

✒ Rent Concessions – Landlord agrees to reduced rent, or no rent at all, for a select period of time, to cover the total cost of the project.

✒ Built-in Cost – Landlord believes the tenant will be an improvement to their building or facility, and decides to cover the entire cost of the interior build out.

✒ Reimbursement – If the landlord is paying for it all, they will either have the tenants pay and then reimburse them, or divide the cost of the project and include it in the total cost of the lease. This is referred to as a build-to-suit lease agreement.

✒ Square Footage Costs – Landlord agrees to pay to remodel a certain square footage, and the tenant covers the rest of the cost of the project.

Will My Business Benefit from an Interior Build Out?

There are many advantages to doing to a commercial interior build-out, whether you are an existing business that needs a facelift or modern technology applications, or a business just started out and in need of commercial space. A custom interior finish-out not only updates your business, making its operations more efficient and cost-effective, it increases staff morale and productivity. Accordingly, all of these effects increase your business’s revenue overtime.

How Do I Get a Bid for a Commercial Interior Build Out in Indianapolis?

Contact BAF Corporation at 317-253-0531 for superior commercial construction general contracting and construction management in Indianapolis, Indiana. Our skilled and experienced commercial general contractors can help you design and build your interior build out, and offer a simple, streamlined process that meets all business objectives. We serve all corporate, commercial, and industrial industries in Indianapolis, Indiana and its surrounding districts. Call today to request free information or to schedule a consultation.

Who Pays for the Cost of the Tenant Improvements?

Posted on June 12, 2020 by bafcorp20

Tenant remodels and leasehold improvements are much different from conventional commercial construction projects since they are intended to be an investment for a business owner. With that being said, when it comes down to who pays for what in a tenant improvement project, the answer can be more complex than you would expect.

Continue reading to learn more about who pays for the cost of tenant improvement (TI) projects, as well as, where to get trusted TI construction work near you.

TI Cost Planning

Generally, TI costs are considered by the landlord of the property when they agree to a rental rate among tenants. Most often, a portion of a tenant’s monthly rent will reimburse a landlord for the cost of TI construction work, however, this is not always the case. In the case of a turn-key tenant improvement project, it is necessary for the landlord to know specific details on the work being performed, including which areas or spaces are being remodeled. Another reason why a turn-key project requires upfront information for a landlord is so that they know how much the costs are going to be for all the work.

TI Allowances and Lease Signings

At the time of the lease signing, both the tenant and landlord should come to an agreement regarding TI allowances. Tenant improvement allowances are sums of money made available to tenants by the landlord to cover some of the cost of needed remodeling work. Such allowances are usually stated on a per-square-foot basis, and most common for new spaces since more renovations are needed to finish the project. However, the amount of money provided by a landlord for TI work varies greatly, and depends on a wide range of factors, such as the age or current condition of the space, duration and value of a tenant’s lease agreement, market demand, and more.

Furthermore, if the total cost of a tenant improvement project exceeds the original, agreed-up allowance, the tenant is responsible for paying the remainder. Although rare, it is possible for the landlord to take on the excess costs themselves, but they will only do so to a certain capped amount, plus increase the tenant’s rent accordingly.

If a tenant decides to take on the TI work themselves, they risk being subjected to delays and unanticipated setbacks, which can hurt them financially since their rent will still be due on the date in the lease contract, regardless if they can move into the space yet or not. In this case, the tenant takes on all of the risk, and might have to pay more for construction, while also paying rent at the same time, without any revenue coming in.

To avoid this hassle, always hire a professional commercial construction company that specializes in tenant improvement work. You see, commercial building teams use a client-centered partnership approach to accurately understand our client’s business objectives and tenant’s needs, and deliver results that maximize their profitability by driving greater value.

Indianapolis Tenant Improvement Construction Contractors

Contact BAF Corporation at 317-253-0531 for trusted tenant improvement construction in Indianapolis, Indiana and its surrounding locations. Our skilled and experienced commercial general contractors deliver a streamlined construction process that meets all defined engineering and design specifications, procurement, schedules, and budgets for your commercial office space or business. Call today to request free information or to schedule a consultation.

How to Find a Qualified Tenant Improvement Contractor

Posted on April 21, 2020 by bafcorp20

As a commercial building owner who wishes to entice long-term tenants to enter into or remain in a lease with you, it is wise to offer a tenant improvement package. To confer such an opportunity to important tenants would mean to protect your overall business objectives and long-term investment goals. But in order to be successful with a tenant improvement (TI) project, you must ensure you enlist the right commercial construction contractors.

Continue below to learn how to find a qualified tenant improvement contractor to help you plan, design, and execute your TI needs.

Indianapolis Commercial TI Contractors 317-253-0531

Start With Licensing and Insurance

The first set of credentials to look for when hiring a commercial contractor for tenant improvement services are licensing and insurance. Commercial construction is a serious undertaking that requires the utmost proficiency and security. A company with an active and good-standing operating license, as well as full-coverage insurance, is a company that can be considered worthy of hiring.

Move On To Qualifications

Beyond licenses and insurance coverage, a TI contractor should retain extensive training and knowledge of the construction field, coupled with years of hands-on commercial construction experience. Look for a licensed and qualified tenant improvement contracting team that has been working in the industry for decades, and can offer an actual portfolio of successful projects.

Furthermore, narrow your search by choosing a TI contractor who has actual experience in the type of business you own or are opening up. For example, if you are a leaseholder to a group of tenants in the medical care industry, you would be wise to select a contractor who has experience specifically in medical building construction and tenant improvements.

Consider Value and Innovation

When it comes to long-term tenants, you want your renovations to stand the test of time. To achieve this, your tenant improvement projects will require higher quality building materials, which can only be offered by an accomplished and reputable commercial construction company. When interviewing potential TI contracting teams, be sure to consider the value they offer in terms of their resources, equipment, and building materials. Furthermore, be sure they can offer current technologies and innovative solutions for your growing business objectives.

Central Indiana Tenant Improvement Contractors You Can Trust

Contact BAF Corporation at 317-253-0531 for commercial TI construction and planning in Indianapolis, Indiana and its surrounding Central Indiana locations. Our commercial construction teams use a client-centered partnership approach to accurately understand our client’s business objectives and tenant’s needs, and deliver results that maximize profitability by driving greater value. When you choose BAF Corporation for commercial tenant improvement planning and construction, you can expect competitive pricing, value engineering, efficient project completion, and turnkey service. Get started with an over-the-phone consultation, today.

Factors to Consider Before Signing a Commercial Office Lease

Posted on March 17, 2020 by bafcorp20

Moving into a new commercial space is a serious undertaking. There are several complex steps to complete in order to get your business back to fully-operating at peak performance following a relocation. But first you must sign a new lease. Before you do so, there are various considerations to apply to your decision in order to protect yourself from entering into a contract you later regret.

Continue reading to learn which factors should be at the forefront of your mind when discussing a new commercial real estate lease prior to signing.

Space Planning and Tenant Improvements 317-253-0531

General Commercial Lease Inquiries

With all new commercial real estate leases, there are basic questions that you must ask. These answers will give you the foundation of knowledge you need to decide whether or not to move forward with the lease agreement. Such questions include the following:

What is the Type of Lease Offered? There are different types of lease agreements for commercial properties, including net leases, gross leases, triple nets, and absolute triple nets.

What are the Terms and Conditions? You must read through all terms and conditions, and derive questions pertinent to your overall objectives and limitations.

Is the Lease Negotiable? Most often, lease agreements are flexible, and landlords will negotiate certain elements in the lease’s terms and conditions.

Will Rent Increase? Rent escalation is common in commercial real estate, like stepped increases that periodically increase in fixed amounts, or increases tied to Consumer Price Index.

Can You Sublease? Long-term leases might contain a subleasing and assignment clause that allows you to lease out all or a portion of your space to another tenant in the future.

Comprehensive Facility Touring

Always be sure to tour the facility as thoroughly as possible before signing a lease. You want your potential commercial space to have an inviting and functional atmosphere. When taking your tours, be sure to focus your attention on cleanliness, attractiveness, curb appeal, practicality, degree of remodeling or renovation needed, and amenities available, like parking, cafeterias, bathrooms, break rooms, lobbies, and more.

Neighboring Properties

Before entering in a legal contract that binds you to a commercial office space, it is wise to first check out your future neighbors. Consider the local businesses and buildings surrounding your potential space, including the actual proprietors and contemporaries you will likely encounter on a regular basis. This could easily thwart your interest in a new commercial space. For instance, if your business is a Zen spa, you wouldn’t want to lease a space directly below a dance studio or next door to a drum store.

Renewal Processes

It is wise to ask about the lease renewal process before making any agreements. Inquire about the terms and conditions of renewing or terminating the lease. In some cases, a tenant is required to notify the landlord within a certain time period that they wish to remain in a lease, while others do not. Communication guidelines and requirements for commercial leases vary from landlord to landlord. So, always be sure you fully understand your role when it comes time to renew or terminate your commercial lease.

Leasehold Improvements and Maintenance

Another important topic of discussion to cover prior to signing a new commercial lease are leasehold improvements. This includes facility maintenance. Questions to ask include, “Are you allowed to modify the space to meet your business’s needs?”, “Is the landlord willing to make tenant improvements before you move in?”, “Is the tenant improvement allowance enough?”, and “Is a maintenance program included in your lease?”

Professional Commercial Space Planning in Indianapolis

Call BAF Corporation at 317-253-0531 to learn more about planning a new commercial space for your business. We provide full-service commercial space planning and permitting services in Indianapolis, and throughout Central Indiana for all businesses and industries. Whether you’ve already moved into a new space or still searching for one, our commercial construction management team has what it takes to meet your unique specifications. Call our office today to discuss your commercial space planning and tenant improvement needs, today.