Intro: Welcome to another Berger Bite!
Michael Feuerman: How do you handle the cost of building out your space, if you don't want to pay for it out of your pocket? There are several ways you can do this. The first most common way is to ask your landlord to provide a build-out allowance that will cover the entire cost of building out your space or a turnkey build-out. The second is to negotiate a fixed allowance from your landlord and try to keep the construction cost at or under that fixed allowance, so you don't have to pay out of pocket for any overage. If there is an overage, you can then ask the landlord to amortize that amount into the rent. In other words, if your space costs $50 a square foot to build out and the landlord is only giving you $40 a square foot and there's a $10 difference that you don't want to pay for right away, you can take that $10 spread it over the life of your lease at an interest rate, and it'll be amortized into your monthly payments. Another way to handle this is to value engineer the cost down. So, once your space has been designed, and you had bids to build it out, you can cut out certain things, in order to make the space less expensive to build out.
Outro: Founded in 1998, Berger Commercial provides client-centric third-party brokerage, property management, and receivership services throughout the Dade, Broward, and Palm Beach counties. Contact us to experience the power of market knowledge. For more Berger Bites, please subscribe to our YouTube channel!