Office space costs are one of the biggest expenses for a business, and because of the high demand, rents have been growing quickly. Before you look for a space, it’s a good idea to know what comprises your total outlay.
Every office space is different, and each will have its own costs associated with it. Here are the general categories that comprise it:
- Base Rent – What the landlord is charging for the space
- Operating Expenses – Your portion of building costs
- Taxes – Your portion of the property taxes
- Utilities – Costs for water, electricity, cleaning, etc.
- Business Costs – Expenses to your business outside of your lease
- Capital Expenses – Includes furniture and moving expenses; if you are changing the space, there could be architectural, engineering and construction costs
Pricing can range from neighborhood to neighborhood and building to building, so you should work closely with a tenant representative (rep) broker. For example, they can help you understand the components of your base rent, such as the load factor, which is your share of the common area costs.
Understand the Types of Leases in Los Angeles
They generally fall into two categories: gross leases and net leases. Within these two categories, there are several variations – here are examples of some common leases:
- Full Service Gross Leases typically include base rent, taxes, operating expenses. The owner is responsible for maintaining the entire building, paying taxes, negotiating vendor contracts, and covering all the expenses.
- Modified Gross Leases typically include base rent, taxes, operating expenses and may include some portion of utilities.
- Triple Net (NNN) leases include your rent only, however, you are responsible for all the other expenses such as property taxes, insurance, maintenance, and utilities.
Los Angeles Office Space Pricing
Office space pricing in Los Angeles varies by neighborhood and building. Here are the Los Angeles neighborhoods that are the most popular for office space as measured by market-leading rents on Truss:
Los Angeles Top Office Space Pricing by Neighborhood
LA Neighborhood - Average price/sq. ft. (Annual)
- Westchester - $96
- Pacific Palisades - $71
- Silverlake - $69
- Beverly Hills - $65
- Malibu - $64
- Santa Monica - $64
- West Hollywood - $63
- Los Feliz - $61
- Culver City - $61
- Century City - $61
Creative and technology companies have been driving absorption and pushing up rents in several submarkets. Large studios such as Disney and Warner Brothers are also signing leases for their expanding digital divisions. The strong local economy has been expanding for years and the demand for office workers is high.
Estimating Square Footage
The amount of square footage you will need to accommodate your operations and how your team is subjective, but there are industry averages to help guide your decision making.
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