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Daycare Center and Family Home Forum>Rental Space Cost
Angel_Face8 06:21 AM 12-09-2010
I am new to this forum, and would appreciate any information. I have an opportunity to rent a 880 sq. ft. room located in a school building that is currently being used as storage. A board of education member has estimated $1000 a month including utilities and phone. People are telling me that this is a bit high. What are your thoughts on this? The school is located in a mid-lower income neighborhood. I would be using it for preschool ages 3-5 yrs only. Also, does anyone have an outline or template I can use for a rental proposal letter?
Michael 06:03 PM 12-09-2010
Welcome to the Forum Angel_Face8. Perhaps someone will chime in on your question. It would help if you told us where this rental is located. In LA this rate would be a great price. Here is a general sample LOI:

Sample Letter of Intent (LOI) or

Memorandum of Understanding (MOI)

Not legally binding but spells out the intent of the legal agreement. This is often a precursor to a lease agreement to minimize legal expense prior to reaching consensus.
Dear {Broker Name}:
We are pleased to submit the following proposal to lease for {Company Name} (Tenant). The general terms and conditions under which Landlord/Tenant will consider a lease are provided b

PREMISES:The premises shall contain approximately 1,700 rentable square feet of space located on the 2nd Floor of the office building located at 1900 Main Street, San Francisco, California, commonly known as Suite 200 (the “Premises)


COMMENCEMENT: The term of the lease will be for approximately Five (5) Years, commencing upon substantial completion of improvements, estimated to be April 1, 2008.


PREMISES: The monthly base rent (“the “Monthly Base Rent”) per rentable square foot for the Premises during the lease term shall be as follows:

Months Rent
1-12 $3.10
Thereafter on the anniversary of the commencement date the Monthly Base Rent shall increase by three percent (3%).

IMPROVEMENTS:Landlord shall construct the improvements pursuant to the attached space plan prepared by Interform Architects, entitled “2nd Floor, Suite 200,” and dated January 16, 2008. All improvements to the Premises shall be constructed using building standard materials.

RIGHT TO TERMINATE:Tenant shall have a one (1) time right to terminate the lease at the fourth anniversary of the lease term. Tenant shall provide Landlord no less than six (6) months prior written notice and shall pay Landlord a termination fee equal to the next six (6) months rent plus the unamortized tenant improvements and leasing commissions with annual interest at an annual rate of 9%. The termination fee shall be paid at the time notice is provided to Landlord.
OPERATING EXPENSES:The operating expense stop shall be established by using 2008 as the base year. If, during the Lease Term, Tenant’s proportionate share of taxes and operating expenses for the building exceeds the amount of operating expenses and taxes for 2008, Tenant shall be responsible for such excess. Operating expenses will be calculated on a grossed-up basis reflecting variable operating expenses as if the building was 95% occupied. Tenant’s exposure to this pass through shall be capped at 5% on an annual basis.

SECURITY DEPOSIT:The amount of the security deposit shall be determined upon Landlord’s review and approval of Tenant’s financial condition. Please review the two most recent years of audited financial statements attached.

RENEWAL OPTION: Tenant shall have the right to extend the lease for a period of five (5) years at 95% of Fair Market Value (FMV). Tenant will have a window to provide notice which will be from nine (9) months to three (3) months before the lease expiration.

FIRST OFFER: Tenant shall have the Right of First Offer on any neighboring spaces throughout the term of the lease.

SIGNAGE:Tenant shall have the right to one building standard directory strip on the building lobby directory and the 2nd Floor lobby directory.

PARKING:Tenant shall be entitled to one (1) unreserved parking pass at $200 per stall.

ACCESS:Tenant shall have access to the Building 24 hours per day, 7 days per week.

PROPOSAL EXPIRATION:This proposal is valid until February 4, 2008 at 5:00 p.m.

This proposal is not intended as, and does not constitute, a binding agreement by any party, nor an agreement by any party to enter into a binding agreement, but is merely intended to specify some of the proposed terms and conditions of the transaction contemplated herein. Neither party may claim any legal rights against the other by reason of the signing of this letter or by taking any action in reliance thereon. Each party hereto fully understands that no party shall have any legal obligations to the other, or with respect to the proposed transaction, unless and until all of the terms and conditions of the proposed transaction have been negotiated, agreed to by all parties and set forth in a definitive agreement which has been signed and delivered by all parties. The only legal obligations, which any party shall have, shall be those contained in such signed and delivered definitive agreement referred to above.

If you have any questions please do not hesitate to call me. If the terms provided herein are acceptable to you, please acknowledge your approval in the space provided below and prepare a lease for our review.
QualiTcare 09:12 PM 12-09-2010
i don't think that's a bad price.
you can rent a decent (not "nice") but decent house around here for $500 a month. of course, commercial property is always more expensive than residential......and then the utilities and phone are included!

i mean, utilities/phone has to be around 300 alone. so, that's like 700 rent? not bad for the location being inside of a school! the location alone will get you clients bc they'll be dropping their older kids at school most likely.
Abigail 09:26 PM 12-09-2010
Do you currently have your preschool up and running so you know how much you earn? Do you get to use the school room 24/7 year round or only for a few hours Mon-Fri? If you're limited on hours it might be a toss up, but if you can have it anytime you could probably do a rental or extra things out of there to make up for the rental costs if you feel it's too high.

Try to see if you have any other rental options or find out how much others are paying in the area for renting the same or close to it in square footage. If you don't hear any others at $1,000 then you could negotiate it down to what others are paying for something similiar!
Angel_Face8 05:05 AM 02-19-2011
Thanks for the replies. I do not have the preschool up and running. The space is now being used as storage. There is an half day Head Start program in the building that the district donates space free of charge. Head Start only pays for their supplies and their lunches (through the district). It only operates during the school year. The parents are asking for an all day all year program. I would also, contract with the districts food service department to provide lunches for my students. I am a certified pre-k teacher with many years of experience. I am located in Northern Ohio. I just think that $1000 is a bit much for space that is not being used. And, Head Start gets donated space. What do you think would be fair rent with all of this mind?
KEG123 05:15 AM 02-19-2011
Could you offer them 700 total? Or 800?
kendallina 02:08 PM 02-19-2011
I think $1000 might be a bit high as well. Have you calculated how much money your business will be bringing in? Have you priced other locations to compare?

Keep in mind that Head Start is a nonprofit and serves low income families, which is probably why they are donating the space, so I don't really think that you have an argument there.

I would price out other locations, do a sample budget and figure out what you could afford and see how out-of-the-range $1000 is.

I would think going back with a counter-offer of $700 or 800 would be ok. The worst that could happen is that they say no and stick with their $1000. Good luck!!
Unregistered 11:56 AM 05-31-2014
Tags:loi, rental
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