How to Evaluate Location, Rent, Office Buildings, Parking, Business Demand and Investment Potential

Buying or renting an office is not simply about finding the lowest price per square foot. A proper evaluation should consider:

• Usable carpet area
• Total occupancy cost
• Parking
• Accessibility
• Building quality
• Fit-out cost
• Rental income
• Vacancy risk
• Tenant quality
• Legal approvals
• Future competing supply
• Resale potential

Landmark Insight:

The cheapest office is not necessarily the lowest-cost office. A lower purchase price can be offset by higher maintenance, weak rental demand, poor parking, expensive fit-out or difficulty finding the next tenant.

1. What Is Office Space?

Office space is commercial property designed primarily for business, professional or administrative activities.

It can include:

• Corporate offices
• Chartered accountant offices
• Law offices
• Consultancy offices
• IT companies
• Back-office operations
• Professional practices
• Branch offices
• Coworking spaces

However, not every office is suitable for every business.

A 500 sq. ft. office may work perfectly for a small consultancy but may be completely unsuitable for a 15-person company.

This is why the first question should not be:

"How much office space can I buy?"

It should be:

"How much usable space does my business actually need?"

2. How Much Office Space Does a Business Need?

Start with the business requirement rather than the property.

Consider:

• Number of employees
• Management cabins
• Meeting rooms
• Reception
• Pantry
• Storage
• Server/utility requirements
• Visitor requirements
• Future expansion

Example

Suppose a company has:

• 10 employees
• 1 director
• 1 meeting room
• Reception
• Pantry
• Storage

A 900–1,100 sq. ft. office may potentially accommodate the requirement depending on the layout.

But if the company expects to grow to 20–25 employees, the same office may become inefficient.

The objective is therefore not to buy the largest possible office.

The objective is to obtain sufficient usable space without paying for unnecessary space.

3. Carpet Area vs. Saleable Area

One of the first questions a buyer should ask is:

"What is the actual usable area?"

Commercial properties can be advertised using different measurements, including:

• Carpet area
• Built-up area
• Super built-up area
• Saleable area

These measurements are not interchangeable.

Example

Suppose two offices are advertised as:

Office A: 1,000 sq. ft.

Office B: 1,200 sq. ft.

At first glance, Office B appears larger.

But if a significant portion of the 1,200 sq. ft. represents common-area loading, the actual usable-space comparison may be very different.

This is why buyers should compare:

Usable area + total cost

rather than simply:

Advertised area + advertised price

4. What Does an Office Actually Cost?

For a rented office, the monthly rent is only one part of the cost.

The actual occupancy cost may include:

• Monthly rent
• CAM or maintenance
• Parking
• Electricity
• Internet
• Security
• Housekeeping
• Other building charges
• Fit-out cost

Example

Office A

Rent: ₹60,000/month

Maintenance: ₹8,000/month

Parking: ₹3,000/month

Other recurring costs: ₹4,000/month

Approximate occupancy cost: ₹75,000/month

Now consider:

Office B

Rent: ₹68,000/month

Maintenance: ₹4,000/month

Parking: Included

Other recurring costs: ₹3,000/month

Approximate occupancy cost: ₹75,000/month

The advertised rent makes Office A appear cheaper.

The actual occupancy cost tells a different story.

Landmark Research Note:

When comparing offices, calculate the total monthly occupancy cost instead of comparing rent alone.