Studio move is complete - my experience
I turned in the keys this morning and now have a garage full of stuff to sort through and place. I've been through one "edit" already and a load went to the Idaho Youth Ranch. As I dig through the remaining pile I'm sure more will be making that trip. Some things are disassembled, like my 4x8 work table. Once that's back together I'll have some more storage space. Peg boards need to go up as well as some shelving. I don't have room to assemble the shooting table or set up lights or backdrops, so they will need to be set up and taken down as needed. All the computers are up and running, but the office as you'd suspect still needs some organizing. I was intent on just getting gear out of the studio and into the house, with organizing occurring over the next couple weeks. I have some orders that need to be fulfilled next week, so I do need to get the work table set up this weekend.
Whether you've experienced it or not, or are just thinking about it. If you're wanting to open a studio you really do need to seriously consider the overhead involved and if you'll be able to have enough billable work to make it worth your time and effort. I'll expand on that over the next few days. Of particular concern is if you're renting space, the form of the rental agreement is important, especially for helping you determine your budget needs. Now, these rental agreements are for the U.S. and may differ in your part of the world, even within the U.S., so don't take this information as gospel. I'm not an expert on these matters, please do your own research.
There are several types of commercial lease agreements. The main ones are: Gross, Net, Triple Net, and CAM.
For commercial operations, the most common rental type is Triple Net (NNN). Basically, you as the renter take on the responsibility of most aspects of the space you occupy, such as maintenance (plumbing, heating, air conditioning, electrical, phone, etc.), improvements (painting, wall-building, flooring), signage, etc. You also pay for your own utilities (power, water, sewer, phone) and take on a portion of the owner's expenses related to the building as a whole. You pay a portion of their taxes, grounds maintenance, alarm monitoring, etc., all their expenses of owning and operating the building. the building owner is still resposible for overall maintence, such as the roof and walls, the basic building structral integrity.
The operating expenses are billed separately from your monthly rent on a quarterly, monthly, or yearly basis, or can sometimes be incorporated into the monthly rent you pay. I'll refer to them as quarterly billings since that's how it worked in my case. This amount varies and is not usually included in the rent figure you're given. You'll see the rent listed as $500 NNN, for example. You need to ask before you sign the lease what the quartly billings are, on average, so you know how much more per month that space will cost. It could be significant. If you're looking for a space and have a budget of $500 per month, the NNN additional payments could easily increase that monthly cost by $100 or likely more.
The Net Lease is similar to the Triple Net Lease, except that you may not pay some of the expenses included in the NNN lease.
The Gross Lease is basically an all-inclusive rate where the rent, utilities, and quarterly billings are all included into one simple payment, like an apartment rent. The landlord pays all other expenses pertaining to owning and operating the building.
CAM is Common Area Maintenance, which is a maintenance charge by the landlord for upkeep of common areas such as landscaping, parking lots and other areas benefitting and used by all tenants.
The Net, Triple Net and CAM charges are generally proportional to the number and size of the tenants. If there is a tenant using up more space or using more resources (water, parking) their quarterly billings should be larger than yours, or if they are using more of a common utility (such as water) your charge should be adjusted accordingly.
The lease type is just one of the many expenses you'll need to consider, but probably the most important. Contract length, terms, restrictions, the amount of the lease, are all generally negotiable. It would do you good to have a lawyer look over the lease contract prior to you signing any document to see if they can reduce your cost or find any restrictions that could hurt your ability to do business (like a restriction on not having a darkroom or installing additional electrical outlets or internet connectivity).
Starting your own studio is a big step. Finding a suitable space is just one of the many you'll take, both forward and backward.
Whether you've experienced it or not, or are just thinking about it. If you're wanting to open a studio you really do need to seriously consider the overhead involved and if you'll be able to have enough billable work to make it worth your time and effort. I'll expand on that over the next few days. Of particular concern is if you're renting space, the form of the rental agreement is important, especially for helping you determine your budget needs. Now, these rental agreements are for the U.S. and may differ in your part of the world, even within the U.S., so don't take this information as gospel. I'm not an expert on these matters, please do your own research.
There are several types of commercial lease agreements. The main ones are: Gross, Net, Triple Net, and CAM.
For commercial operations, the most common rental type is Triple Net (NNN). Basically, you as the renter take on the responsibility of most aspects of the space you occupy, such as maintenance (plumbing, heating, air conditioning, electrical, phone, etc.), improvements (painting, wall-building, flooring), signage, etc. You also pay for your own utilities (power, water, sewer, phone) and take on a portion of the owner's expenses related to the building as a whole. You pay a portion of their taxes, grounds maintenance, alarm monitoring, etc., all their expenses of owning and operating the building. the building owner is still resposible for overall maintence, such as the roof and walls, the basic building structral integrity.
The operating expenses are billed separately from your monthly rent on a quarterly, monthly, or yearly basis, or can sometimes be incorporated into the monthly rent you pay. I'll refer to them as quarterly billings since that's how it worked in my case. This amount varies and is not usually included in the rent figure you're given. You'll see the rent listed as $500 NNN, for example. You need to ask before you sign the lease what the quartly billings are, on average, so you know how much more per month that space will cost. It could be significant. If you're looking for a space and have a budget of $500 per month, the NNN additional payments could easily increase that monthly cost by $100 or likely more.
The Net Lease is similar to the Triple Net Lease, except that you may not pay some of the expenses included in the NNN lease.
The Gross Lease is basically an all-inclusive rate where the rent, utilities, and quarterly billings are all included into one simple payment, like an apartment rent. The landlord pays all other expenses pertaining to owning and operating the building.
CAM is Common Area Maintenance, which is a maintenance charge by the landlord for upkeep of common areas such as landscaping, parking lots and other areas benefitting and used by all tenants.
The Net, Triple Net and CAM charges are generally proportional to the number and size of the tenants. If there is a tenant using up more space or using more resources (water, parking) their quarterly billings should be larger than yours, or if they are using more of a common utility (such as water) your charge should be adjusted accordingly.
The lease type is just one of the many expenses you'll need to consider, but probably the most important. Contract length, terms, restrictions, the amount of the lease, are all generally negotiable. It would do you good to have a lawyer look over the lease contract prior to you signing any document to see if they can reduce your cost or find any restrictions that could hurt your ability to do business (like a restriction on not having a darkroom or installing additional electrical outlets or internet connectivity).
Starting your own studio is a big step. Finding a suitable space is just one of the many you'll take, both forward and backward.
posted by Mike Shipman | 11:37:00 AM
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