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 Washington, DC
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.
Washington DC Office Space Pricing
Office space pricing in DC varies by neighborhood and building. Here are the DC neighborhoods that are the most popular for office space as measured by market-leading rents on Truss:
Washington, DC Top Office Space Pricing by Neighborhood
DC Neighborhood - Average price/sq. ft. (Annual)
- Mount Vernon Square - $67
- Adams Morgan - $58
- Chinatown - $58
- Penn Quarter - $57
- Swampoodle - $56
- H Street - $55
- NoMa - $55
- Downtown Washington, DC - $54
- East End - $54
- Foggy Bottom - $54
Absorption has been uneven across the market so vacancy is uneven, which is reflected in submarket rents. This could be attributed to the addition of new office buildings to the market, which give tenants more options. Coworking providers continue to absorb space at a good pace.
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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