5 Most Affordable Cities to Lease Commercial Real Estate

Published: 06-21-2022  Category: Flexible Lease
Article Highlights:

  1. A great indicator of leasing rates and trends can be to look at rental rates. They can often be more available and enlightening.
  2. Pay attention to individual submarkets. A submarket can be a completely different landscape than the city they reside in. Some larger, expensive cities, have hidden submarket gems with better pricing and atmosphere.
  3. Watch for each area’s vacancy rates. A low vacancy rate might mean higher demand, so you’ll want to ensure new construction can outpace dropping vacancy.
  4. Older areas and buildings typically mean cheaper leasing opportunities. However, this could also mean higher maintenance costs.
  5. Having a trusted Commercial Real Estate Broker can be crucial to successful leasing negotiations. Don’t go to the negotiation table unprepared and alone.

Are you in the market for some new office space? If so, you’ll be glad to know that there are a few affordable cities out there where you can lease commercial real estate.

Recently, CommercialSearch released their rankings for the “50 Priciest U.S. Office Submarkets.”

We’re going to flip the list and take a look at affordable leasing opportunities that you might have not considered.

Leasing vs. Renting: What Are the Differences?

National leasing prices can be difficult to track, and there isn’t currently a well-documented study to compare cities’ leasing prices with.

However, the average asking rent is a good indicator of the general trends in the market.

By looking at the average rent for a specific type of property, we can get a better understanding of how leasing prices compare.

This data can be used to compare different markets and to make informed decisions about where to lease property.

While national leasing prices may not be well tracked, average asking rent provides a useful snapshot of the market.

Which Differences Should You Be Aware Of?

For most people, the terms “lease” and “rent agreement” are interchangeable. However, there is a legal difference between the two that generally corresponds to the length of time they cover.

A rental agreement is usually for a short term—usually 30 days—while a lease is for a longer period—usually 12 months. Once the lease term is up, it usually extends to a month-to-month rental.

The main advantage of a lease over a rent agreement is that it offers more security.

If you’re planning on staying in one place for a while, a lease can give you peace of mind knowing that your rent won’t go up unexpectedly or that your landlord won’t ask you to move out on short notice.

On the other hand, if you anticipate needing flexibility in your housing situation, a rent agreement may be the better option.

While most leases require notice if you intend to break the contract early, with a rent agreement, you can typically give 30 days’ notice and be on your way.

Ultimately, whether you choose a lease or rent agreement will come down to your personal circumstances and how long you anticipate needing to stay in your current home.

#1 – Dallas/Ft. Worth, TX (Uptown/Oak Lawn Area): Your Home for Low Rent and High Growth

Dallas commercial real estate
Important Data:
  • Average Asking Rent per Square Foot: $46.47, reported by CommercialSearch.
  • SubMarket: Uptown/Oak Lawn.
  • Population: 7,451,858 according to the 2020 Census (via Census Reporter).
  • Biggest City Industries: Retail, health services, food services and education.

City Population Stats

According to the Dallas Culturemap, Dallas-Fort Worth is the country’s fourth-largest metro area and was one of only three U.S. metro areas to gain at least 1.2 million residents over the decade. The other two were Houston and Atlanta.

In 2019, the U.S. Census Bureau estimated that the DFW metro area had a population of over seven million people, making it the most populous metro area in Texas and the 12th-largest in the United States.

The region’s economy is primarily based on banking, commerce, telecommunications, computer technology, energy, healthcare and medical research, transportation, and logistics.

According to the St. Louis Fed, in 2020, Dallas–Fort Worth–Arlington was the fourth-largest Metropolitas Statistical Area (MSA) with an annual GDP of more than $477 million.

This is due impart to being home to 24 Fortune 500 companies, the third-largest concentration of such companies in the nation.

According to City-Journal, These include American Airlines Group, AT&T, Comerica Bank, Texas Instruments, and JPMorgan Chase.

Other notable companies headquartered in Dallas include Southwest Airlines, Energy Future Holdings, Oncor Electric Delivery Company, Zales Jewelers, Neiman Marcus Group, and Mary Kay.

Why Is This Area So Affordable?

The combination of a strong economy and a relatively high cost of living has made the Dallas-Fort Worth area one of the most affordable places to lease commercial real estate.

In addition, the abundance of new construction in the area has helped to keep lease rates low despite the decreasing vacancy rate.

CommericalSearch reports that the metro’s vacancy dropped to 17.1% (that’s a decrease of 190 basis points year-over-year).

Thanks to this combination of factors, the Dallas-Fort Worth commercial rental market is currently one of the most desirable in the country.

#2 – Washington, D.C., Suburban Maryland (Rosslyn Area): An Affordable Option Near the Nation’s Capital

Washington DC commercial real estate
Important Data:

City Population Stats

The Washington, D.C. metropolitan area is home to over six million people and is the sixth-largest MSA in the United States.

The city is known for its high cost of living and its abundance of government jobs.

However, if you head to the Rosslyn area of Arlington, Virginia (which is just across the river from D.C.), you’ll find that it’s a lot more affordable than other parts of the city.

In fact, Rosslyn has an average office rent price of just $46.69 per square foot.

In the past decade, Rosslyn has undergone a radical transformation.

Once a sleepy residential neighborhood, Rosslyn is now home to dozens of top-tier businesses, including Nestle, Deloitte, Rosetta Stone, and more.

According to the Rosslyn Business Improvement District, these companies have brought with them a new wave of state-of-the-art office buildings and restaurants, turning Rosslyn into a business hub for the future.

Whether you’re looking for a quick lunch or a business dinner, there’s a restaurant to suit your needs.

And with the Metro just steps away, Rosslyn is also incredibly convenient. If you’re looking for a place to do business in the future, Rosslyn should be at the top of your list.

Why Is This Area So Affordable?

So why is this area so affordable? One reason is that it’s located in a suburban area outside of the city.

Another reason is that Rosslyn is home to a number of businesses, including government agencies, international organizations, and associations.

Rosslyn VA’s vacancy rate is one of the main reasons why lease rates are so affordable for office tenants.

The low vacancy rate is due in part to the presence of businesses that help to fill up the available space.

For example, Rosslyn is home to a number of co-working spaces and incubators that provide flexible office space for small businesses and startups.

These businesses help to keep the area’s vacancy rate low, which in turn helps to keep lease rates affordable for office tenants.

Thanks to its close proximity to D.C. and its relatively affordable lease rates, Rosslyn commercial real estate is an attractive option for businesses looking to lease.

#3 – Miami, FL (Coral Gables, Downtown Area): The Perks of Avoiding Seasonal Shifts

Miami commercial real estate
Important Data:

City Population Stats

Miami was the ninth-largest metropolitan area in the United States and has a population of over 6 million people, according to the U.S. Census Bureau in 2020. The city is known for its beautiful weather, beaches, and tourist attractions.

Although it is often overshadowed by its more expensive neighbors, the Coral Gables - Downtown area is a hidden gem of the Miami real estate market.

With an average office rent price of just over $47 per square foot, it is one of the most affordable areas in the area, according to CommercialSearch.

Although it may not be as glamorous as other parts of Miami, it has a lot to offer in terms of amenities and location.

For example, the area is home to a number of parks and public spaces, as well as a variety of shops and restaurants.

Plus, its proximity to Downtown Miami makes it an ideal option for commuters.

In short, if you’re looking for a more affordable alternative to other parts of Miami, Coral Gables is definitely worth considering.

Why Is This Area So Affordable?

So why is this area so affordable? One reason is that it’s home to a large number of students and faculty members from the University of Miami.

Coral Gables is a unique city in Florida. It is not influenced by seasonal shifts like other parts of the state. The economy here includes local and international businesses.

The city municipal services, exceptional quality of life, architectural and natural beauty, convenient access, responsible growth, and diversified economy make it an ideal location for domestic and international investment.

These factors make it an attractive place to live and work. As a result, the coral gables commercial real estate market is strong and stable.

#4 – Fort Lauderdale, FL (Fort Lauderdale CBD): Older Areas Mean Lower Pricing

Fort Lauderdale commercial real estate
Important Data:
  • Average Asking Rent per Square Foot: $47.48, reported by CommercialSearch.
  • SubMarket: Fort Lauderdale CBD.
  • Population: 181,818 people as of 2020 according to the U.S. Census Bureau.
  • Biggest City Industries: Professional, Scientific & Technical Services, Health Care & Social Assistance, and Retail Trade.

City Population Stats

Fort Lauderdale is a city located in the southeastern United States. Just like its predecessor on this list, the city is known for similar beautiful weather, beaches, and tourist attractions.

The Fort Lauderdale CBD submarket is a lot more affordable than other parts of the city.

The average office rent price in the Fort Lauderdale CBD is $47.48 per square foot, which is significantly lower than the average office rent prices in other parts of the city.

Why Is This Area So Affordable?

According to a report by Yardi Matrix, the lower office rent prices in the Fort Lauderdale CBD are due to the fact that there is a higher concentration of Class B and Class C office buildings in the CBD than in other parts of the city.

The majority of the office buildings in the Fort Lauderdale CBD are older, less expensive buildings that are not as desirable to tenants as newer, more expensive buildings in other parts of the city.

As a result, landlords in the Fort Lauderdale CBD have to offer lower rents to attract and retain tenants.

Despite the fact that rents are lower in the Fort Lauderdale CBD, the submarket is still able to provide tenants with a variety of amenities and conveniences that are not typically found in other parts of the city.

For example, the Fort Lauderdale CBD has a number of restaurants, shops, and entertainment options that are within walking distance of most office buildings.

In addition, the Fort Lauderdale CBD is served by multiple mass transit options, making it easy for tenants to get to and from work without having to drive.

The Fort Lauderdale CBD is an affordable option for tenants looking to lease office space in the Sunshine State.

#5 – San Diego, CA (University City Area): Surprising Pricing in the Golden State

San Diego commercial real estate
Important Data:
  • Average Asking Rent per Square Foot: $54.20, reported by CommercialSearch.
  • SubMarket: University City.
  • Population: University City makes up 61,449 of the larger 14,065,696 people in San Diego, according to Niche.com.
  • Biggest City Industries: International Trade, Manufacturing, Military, and Tourism.

City Population Stats

San Diego is the eighth-largest city in the United States and has a population of more than 14 million people. The city is known for its beautiful weather, beaches and tourist attractions.

However, if you take a trip to the University City area, you’ll find that it’s a lot more affordable than other parts of the city.

In fact, University City has an average office rent price of just over $54 per square foot.

Why Is This Area So Affordable?

So why is this area so affordable? One reason is that it’s home to a large number of students and faculty members from the University of California, San Diego.

Another reason is that the area is filled with a variety of businesses, including international trade, manufacturing, and the military, according to the San Diego Government.

These businesses help to keep the area’s vacancy rate low, which in turn helps to keep lease rates affordable for office tenants.

Thanks to its strong economy and relatively affordable lease rates, San Diego commercial real estate is an attractive option for businesses looking to lease.

The Takeaway: How to Begin Your Commercial Leasing Journey

If your business is looking for an affordable place to lease commercial real estate, then you should definitely consider one of these five cities.

Thanks to their strong economies and relatively low lease rates, these cities are attractive options for businesses of all sizes.

To begin your commercial leasing journey, the first step is to figure out what type of space you need.

Here are some questions to ask yourself:

  • Do you need a large retail space for your store or a smaller office space for your startup business?
  • Do you need a space that’s already built out or are you willing to do some build-out yourself?
  • Are you looking for a space in a specific location or are you willing to be open to multiple options?

Answering these questions will help you narrow down your search and make the leasing process much easier.

Once you know what type of space you need, the next step is to start looking for properties that fit your criteria.

The best way to do this is by working with a qualified commercial real estate broker who can help you find the right space for your business.

Finding a Good Commercial Real Estate Broker

A good broker will be familiar with the market and can show you a variety of properties that fit your budget and needs.

They will also be able to negotiate on your behalf and help you get the best lease rate possible.

When you’re ready to start looking for a broker, be sure to ask for referrals from people you trust.

Once you’ve found a few brokers that you’re interested in working with, schedule a meeting so you can get to know them and see if they’re a good fit for your needs.

Asking the right questions during this meeting will help you determine if the broker is knowledgeable and experienced, and if they’re someone you can trust to help you lease commercial real estate.

Some questions to ask include:

  • How long have you been working in commercial real estate?
  • What is your experience with leasing office space?
  • Do you have any examples of deals that you’ve successfully negotiated on behalf of your clients?
  • What is your approach to lease negotiation?

After meeting with a few different brokers, you should have a good idea of who you’d like to work with.

Working with your broker, you should tour a few different properties that fit your needs and budget.

Once you’ve found a space that you like, it’s time to begin the lease negotiation process.

Lease Negotiation Dos and Don’ts

One of the most important parts of leasing commercial real estate is negotiation. This is where you’ll determine the terms of your lease, including the length of the lease, the price, and any other conditions that need to be met.

To ensure that you get the best possible deal, there are a few things you should do (and avoid doing) during the negotiation process.

  • Do your homework and understand the market rate for the type of space you’re looking at. This will give you a good starting point for negotiations and help you avoid paying too much for your space.
  • Don’t go in blindly, you’re in control of this conversation, but only if you’re prepared.
  • Do be clear about what you want and to have realistic expectations of what you’re willing to pay. It’s helpful to write down your goals for the negotiation so you can refer back to them if you get off track.
  • Don’t get caught up in the sales pitch and forget those goals.
  • Do remember that it may take some time to reach an agreement.
  • Don’t be overeager to settle on a deal, be patient and be prepared to compromise so you can get the best deal possible.

Lease negotiation is an important step in the commercial leasing process, and it’s one that you should not take lightly.

Be sure to work with your broker to negotiate a fair lease rate that works for both you and the landlord.

If you need help understanding the lease or have any questions about the negotiation process, be sure to ask your broker.

They’re there to help you through every step of the leasing process and will make sure that you get the best deal possible.

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