Leasing office space is one of the most consequential decisions any business makes — and it’s evolved dramatically in recent years. The post-pandemic office market has created both challenges and opportunities for tenants: more available space in many markets, more flexible lease structures, and landlords who are more willing to negotiate than at any point in the past decade.
If you’re in the market for commercial office space, here’s how to approach it with the knowledge and strategy to get a great outcome.
The Office Market Has Shifted in Your Favor — Use It
Let me start with the market context, because it shapes everything that follows. In most major markets, office vacancy has risen significantly since 2020. Remote and hybrid work models have caused many occupiers to reduce their footprints — and that supply overhang has created a tenant-favorable environment with meaningful negotiating leverage.
What this means practically:
- Landlords are more willing to offer generous TI allowances to attract and retain tenants
- Free rent periods have extended in many markets
- Shorter lease terms and greater flexibility are more achievable than they were five years ago
- Class A buildings that were previously inaccessible to smaller tenants are now competitive
The office market of today looks very different from the office market of 2019. Tenants who understand this dynamic and negotiate accordingly will find exceptional value.
Define Your Office Space Requirements
Before you search, document your specific office requirements:
- Headcount and growth: How many employees today, and how many in three to five years?
- Space type preference: Private offices vs. open plan vs. hybrid configurations
- Collaboration needs: Conference rooms, huddle spaces, phone booths, and amenity areas
- Location: Proximity to clients, employees, transit, and amenities
- Building class: Class A, B, or C depending on your budget and client-facing requirements
- Parking: Ratio requirements and whether parking is included or separately charged
Understand Office Building Classifications
Office buildings are classified by quality, location, and amenity level:
- Class A: Premier buildings with top-of-market finishes, amenities, and locations — typically the most expensive but offering the best tenant experience and client impression
- Class B: Good quality buildings with functional layouts and reasonable amenities — typically offer better value than Class A, particularly in the current market
- Class C: Older buildings with minimal amenities — suitable for back-office or budget-constrained operations
In the current market, the gap between Class A and Class B pricing has narrowed in many cities — making Class A office more accessible than it’s been in years.
Key Office Lease Considerations
Usable vs. Rentable Square Footage
Office leases typically quote rent on rentable square footage — which includes a proportionate share of common areas like lobbies, hallways, and bathrooms through what’s called a load factor or loss factor. A space that’s 5,000 usable square feet might be quoted as 6,000 rentable square feet with a 20% load factor. Understanding this distinction is essential for accurate space and cost comparisons.
Tenant Improvement Allowance
In office leases, TI allowances are one of the most critical negotiating points. Office build-outs — particularly those involving significant partition work, technology infrastructure, and custom finishes — can cost $80 to $150 per square foot or more. A well-negotiated TI allowance can dramatically reduce your out-of-pocket build-out cost.
Operating Expenses and Base Year
Many office leases use a base year expense structure — the tenant pays their pro-rata share of operating expense increases above the base year amount. Understanding what’s included in operating expenses and negotiating the base year carefully can have significant financial implications over a multi-year lease term.
Amenities and Building Services
Modern office tenants increasingly value building amenities — fitness centers, conference facilities, food and beverage options, outdoor spaces, and technology infrastructure. These factors affect employee satisfaction, recruitment, and daily productivity. Evaluate them as part of your total value assessment, not just the rent.
Negotiate for the Current Market
In most office markets today, tenants have leverage. Use it:
- Push for TI allowances that cover your full build-out requirements
- Request extended free rent periods — six to twelve months is achievable in many markets
- Negotiate lease terms that align with your business planning horizon — and secure renewal options at defined rates
- Insist on operating expense caps and audit rights
- Explore shorter initial terms with renewal options rather than committing to ten-year terms in an uncertain market
If you’re looking for commercial office space and want an advisor who understands the current market dynamics and how to leverage them in your favor, I’m Matt Bingaman. Contact me today and let’s find the right office on the best possible terms.