Negotiate an office lease

Regarding the Lease Agreement, the term and rent are the primary negotiation points. Where possible, you may be able to negotiate a one-year lease or a two-year lease and that includes an option to renew. The option to renew should be at the lower of the market rate or the escalated rate, although in a landlord’s market, they will often force you to agree to the greater of the two.

As for expenses, some expenses may pass through to the tenant on top of the rental rate for the office. These should be disclosed early in the process, in explicit language.

Some of the typical costs consider when you negotiate an office lease; upkeep, maintenance fees (CAM), HVAC, security, insurance, and more. These charges are usually the responsibility of the tenant, so find out how these are measured and charged.

When it comes to maintenance and repair at the office building or within the office suite, commercial office space leases differ from residential because the costs maintenance may fall on the tenant rather than the landlord. Of course, this is not always the case. Some office leases stipulate that the tenant is responsible for all property upkeep and repairs while others specify that the tenant is responsible for a specific set of costs.

Be sure to carefully review your lease in detail and, as said earlier, hire an attorney who specializes in commercial office leasing to analyze and explain the risks associated with the various clauses.

In case of any default on your rent payments, there are steps you can take during the lease negotiation process to protect your interests. It is highly doubtufull (and illegal) that you be locked out immediately, but there could be some clauses that give the landlord some accelerated ways to initiate eviction proceedings.

To protect your investment and long-term business interests, it is worth investigating and negotiating some potential add-on clauses to your lease.

The ability (or right) to sublease your space allows for some flexibility in case you experience a change in your business. When you negotiate an office lease, this subleasing is very important.

Additionally, you can prevents the landlord from leasing other spaces on the property to a direct competitor of yours by having him insert an exclusivity clause. This is most relevant for retail tenants.

With these tips, you can negotiate an office lease with confidence.


March 21, 2017 Facebook Twitter LinkedIn Google+ OpenSpace3


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