What's Involved in Leasing Office Space
Knowing what's involved in leasing office space is vital to negotiating the right lease for your business. Doing it right and avoiding pitfalls like hidden costs will help save costs and create the right conditions for business growth.Here are our top tips for negotiating a commercial lease for your business:
Negotiating the Lease
Start by negotiating the rent and term of the lease. Try to negotiate one to two year leases with an option to renew, so you're not tied into a lengthy contract. Make sure you know when the rent will increase and by how much.A tenant rep broker can help you negotiate more effectively. Just make sure he or she has no connection to the landlord. Consult a real estate lawyer for advice on protecting your interests and help with scrutinizing the fine print.
Identifying Hidden Expenses
It's definitely worth exploring the costs involved beyond your monthly rent. Find out how utilities are measured - is energy or water metered, for example? Or will you pay a flat fee based on square footage?Your landlord may impose maintenance or Common Area Maintenance fees for shared facilities, so ask for a full breakdown of costs typically incurred by tenants.Importantly, ask where you stand when it comes to late payments. What's the landlord's policy on this and what would the repercussions be?
Knowing your responsibilities
Every office lease is different, so make sure you know where you stand with regard to your responsibilities. Ask whether you'll be responsible for maintenance and repair, and to what extent - will it be all property repairs or just system repairs, like air conditioning? Know what you're letting yourself in for.
Protect your Business Interests
Explore the best ways to protect your investment. Among the options you could consider, a sublease would give you the flexibility to subsidize your outlay by subletting part of your office space to another company. The landlord may also be willing to consider a co-tenancy agreement, whereby you can break the lease if the anchor tenant shuts up shop.Finally, ask the landlord to include an exclusivity clause to prevent them offering nearby space to a competitor.
Check out our Company Relocation Checklist for all the commercial implications of moving office.
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