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Negotiating the Best Commercial Office Lease: The Standard Office Space Lease Agreement

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So you’ve found that perfect commercial office space for your organization, whether a small start-up or huge corporation. You’ve viewed the property and made a clear assessment that all your needs are available at the selected location.

Once you’ve told the commercial office property owner that you want to locate your business in their property, you are likely to be presented with a standard lease package. Do not sign any papers at this point but accept the lease for review. Explain to the landlord that you much go over the lease with care so that you completely understand it.

You specific needs are unique and may require significant lease changes during negations. Here are a few specific points that any tenant should look for in the standard lease package:

·         An accurate description of the commercial office space should be clearly listed in the lease.

·         How much is the rent and exactly when is it due? Are there any late charges if not paid on the correct date?

·         Is there a security deposit and how much is it? Under what conditions is this deposit repaid upon vacating the commercial office space and what conditions permit the landlord to refuse to return the security deposit?

·         What is the lease period and are there provisions to facilitate lease renewal if desired?

·         What are the terms in the lease regarding vacating the premises early? Do you have the right to move into another, larger office space owned by the landlord without penalty? Do you have any rights to rent additional space if your business grows more rapidly than anticipated?

·         Is there a cleaning deposit for preparing the space for the next tenant when you vacate the premises and is this fee returned if you leave the premises in the same condition as upon delivery?

·         Identify verbiage defining how much parking may be used by the tenant and what, if any, number of spaces can be marked as reserved.

·         Review all references to use of common space. You should have the right to enter and egress at any time of day or night and access to all common spaces unless specific restrictions are contained in the lease. Also, watch out for clauses regarding common space upkeep or charges.

·         The lease should clearly state what utilities are the responsibility of the tenant as well as what are paid by the landlord. The same goes for charges for maintenance and repairs for any problems not the result of misuse or neglect on the part of the tenant.

·         Is there are space in the lease or reference to an addendum where notes regarding the condition of the property at delivery may be noted.

·         Is there any defined allowance for tenant improvements?

·         What rights to signage are included in the lease?

·         Does the lease provide for delivery of a punch list after tenant improvements are accomplished?

There are dozens of additional points that will stand out in the lease to you. Some of them may be points you do not understand and you should highlight these for investigation. Other verbiage may not meet your needs. Highlight each portion of the lease that either is unclear, misleading or requires negotiation. These are items that you will need to cover with the help of your leasing team.

In the next article in this series we will determine who the members of your leasing team should be and how to select the best team to ensure the best commercial office lease for your business. 

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By: James Osgood

Office Leasing Tips , Office Rental , Office Space , Office Space Negotiations

Negotiating the Best Lease for Commercial Office Space: An Introduction

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Perhaps you operate a small start-up business that has outgrown your home office. Maybe your company is mid-sized and is growing out of the commercial office space you occupy. Or, you may head a large organization that needs an additional facility to support a new contract. Whatever your situation, you’ve realized that you need to lease a commercial office space.

You’ve begun the search for space. You may have used an online commercial office locator such as Office Finder or you may have search by driving by empty facilities. Whatever method you used, you’ve found the perfect location that suits your every need. It has location, location, location, plenty of parking for employees and customers, good security, and you have decided it is the spot for your organization whether large or small.

Now you are ready to negotiate the best lease possible. The lease negotiation process is much like visiting a foreign country where you do not speak the language. You might walk into a restaurant, thinking you ordered chicken and be served fish.

In order to obtain a lease for the commercial office space, you need an experienced guide who will have your best interest at heart and who has negotiated many successful leases in the past. A lease broker is a necessity. It’s a sure bet that the landlord or property management company offering the lease has plenty of experienced assistance to help them get the advantage. So, protect yourself by following some important processes that can help you negotiate successfully.

In this series of posts we will look deeper into the necessary processes and step:

The Basic Process: In this process we will look into reading the standard commercial office space lease initially offered by the landlord and spotting the points that require negotiation.

The Team you Need on Your Side: Here we will look at choosing a Lease Broker, Space Planner, and Legal Counsel if needed. We’ll determine why this team is needed and what each party will do to help you negotiate the lease.

When Disaster Hits: - What terminology does the lease contain regarding damage, whether caused by you or by an act of nature and who is responsible for what costs. You really want to ensure you protect yourself and your organization when the totally unexpected occurs.

Financial Analysis: How and why do you need to do a full financial analysis on what it will really cost you to lease the commercial property?  The results may surprise you and negotiation points will be revealed that are not apparent by simply reading verbiage in the lease.

Relocation Clause Protection: What happens is your outgrow the office space before the lease ends? What happens if you need to relocate due to property condemnation or any other reason?

Tenant Improvements Allowances and Permissions: This important leasing process determines what tenant improvements will be permitted and who will pay for what. This negotiation point can cost you thousands of dollars if not addressed property. Learn how to get the best lease options in this area.

The Devil is in the Details: The fine print can be difficult to understand but is just as important as any other process of commercial lease negotiation. What details should you and your lease broker discuss in detail and how should they be negotiated to protect your unique interests?

The Final Step, Lease Signing: After negotiating the best commercial office space lease for your organization, it is at long last time for you and your lease broker to sit down at the table with the landlord and his or her team and sign the legal documents after a final review.: 

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By: James Osgood

Lease Negotiations , Office Leasing Tips , Office Rental , Office Space , Tenant Representation

Coworking Irresistible Offers - Will you buy in?

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Coworking is the latest trend to hit the Office Space market. I thought it would be interesting to find out what they think they are selling. To do so I decided to track down the tag lines many coworking spaces are using. Here is a sampling of them. As you can see, the ideas that permeate are that "It's The People" who you can collaborate with and an "Alternative to the traditional workplace" are the most important ingredients.

Love Where You Work - Select Office Suites NYC

Individuality Without Isolation – Office Nomads Seattle

A Physical Social Network - WeWork NYC, SF & LA

Community Center for Independents – New Work City NYC

Where Entrepreneurs Work and Connect – Green Space NYC

Where Change Goes to Work – The Hub SF

The Workplace for the New Economy – NextSpace SF

Collaborative Office Space to Think, Work and Innovate – Co-Spot SF

A Nicer Place to Work – Citizen Space SF

Building the World We Want to Live In – Hub Seattle

A Coworking Boutique – The Mill Seattle

Space. Work. Network. – The Yard Brooklyn

Work. Learn. Make. – 3rd Ward Brooklyn

Rethinking the Workplace – WorkBar Boston

Better Work Starts with Better Coworkers - Independents Hall Philly

A Workspace Retreat from Traditional Office Monotony – Work/Playce Philly

You name your passion and we will help you find a way to make it grow – Spice Factory Chicago

Neighborhood coffee house built for mobile professionals, freelancers, creatives and anyone else who would like to get work done – Topics Chicago

A clubhouse for entrepreneurs, designers, and geeks – The Speak Easy Indy

A Place to Work & A Place to Grow – 151 Locust Atlanta

You know how you always wonder where all the cool kids hang out? Well, wonder no more - Lightbulb Charlotte

work FOR yourself, not BY yourself - Blankspaces LA

Boston Office Space , Chicago Office Space , Coworking office space , Flexible Workspace , Manhattan Office Space , New York Office Space , Office Rental , Office Space , Philiadelphia Office Space , San Francisco Office Space

The Trend Toward Flexible Workplaces - How Will it Affect Your Office Space?

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Trends toward flexible workplaces has replaced the “doing business as usual”. In fact, the term “doing business as usual” has almost no meaning today if we want to complete in today’s economy and the changing marketplace. We have three, and in some cases, even four generations colliding in the workforce today and each has its own values, life styles and work styles. These all have to be accommodated in order to turn a profit.

The flexible workplace trend -- that of providing each generation of worker the environment in which they can be most productive -- has been driven by pure dollars and cents (read “sense” here). Even within each generation in the workplace, there are those employees that simply by their very natures work best and are more productive in differing environments.

A truly flexible workplace provides an office space where some workers, especially the most traditional employees such as the veteran and baby boomer generations, report to a desk and perform their tasks from there daily. This category of employee needs the direction of a schedule of 9-5 or similar, reporting five days per week on a more or less fixed schedule. These can be key players in the business and shouldn’t be shunned just because of their old fashioned work style. They need the networking, idea generating, and stability of getting away from home to work. They may have small children that make working from home less than productive, or they have the need for IT support for computer issues. Don’t discount this talent in any way. Their ideas will make money, just as in past decades, but if you only have this type of employee, you will miss out on a world of talent. We all know: talent is everything in staying on the edge of the market today. In order to keep good talent, provide for their needs.

Another wealth of talent is available through the virtual world. From simple, mundane tasks such as data base input to highly creative tasks such as design and graphic arts, people often work best from home. Moms that might not be on the job market due to child care issues can be highly productive while the children are in school and after the kid’s bedtime. People who have the talent but don’t live in your city are also key players in this group of the flexible workplace. There is no good reason why some tasks must be performed between 9 and 5, five days per week. As long as the job is done within budget and schedule, the hours in which it is performed should not be an issue with the virtual employee, rather productivity should be the primary measure. This is one form of outsource, but outsourcing to the highly skilled talent that prefer to skip the commute and use that time to log in, do the job, and log out. It’s a huge trend today with more and more work being doing from home and the employee only appearing for face-to-face meetings or networking when necessary – or never. The employee may be across the country or even across the world from the home office and still produce valuable input. With online meeting tools, you may choose to hold meetings including this type of employee or simply work through assignment, price quote, product delivery, payment. It’s working well today for many businesses.

Depending on your market and what you market, you may need employees that visit clients and customers frequently. This portion of the flexible workplace will provide computer time in the office as needed but  some, or even most, of the job may be performed “on the run”, using personal data devices such as iPhones and laptops and third spaces to get the job done in between client visits. Why have someone drive across town to use a computer with secure networking from just about anywhere. A Starbucks or other Coworking space may be the best workspace to update contacts, send email, update the boss, get the latest info from the office, and pick up the office news via email. This type of employee wants the flexible workspace of choosing a parked auto, a café, their home, or the office to get their jobs done.

If you want to keep happy talent and cut costs, encourage flexible workspaces to stay on the leading  edge and attract the most talented employees. With technology moving forward, and the more traditional type of employee retiring or becoming much scarcer, you may find yourself working from home to operate the entire business in years to come. 

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Coworking office space , Flexible Workspace , Office Relocation , Office Rental , Office Space Design

What Does it Mean to be an Office Tenant in an Improving Market?

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After some really bad times, the office market in US finally began a slow but steady recovery in 2011. Ryan Severino, senior economist for REIS said, “During 2011, the office vacancy rate declined by around 30 points when compared to 2010.” The result of this decline is that rental rates rose by about 1.6 percent, the first increase sine 2008. While this is not a huge increase, the recovery trend is expected to continue on a steady basis.

Office tenants in this market experience fear and doubts about where the economy is going. According to Ken Ashley, senior director of Cushman & Wakefield’s Atlanta office tenants are focusing on using floor space more efficiently, resulting in a trend for office tenants to seek out offices with less square footage, a trend called “density with dignity”.

So what does this mean to office tenants seeking to lease an office?

  • Increasing Office Rents: As noted above, the rental rates are rising slowly but steadily, so negotiating a new lease or moving to a different office space may well mean paying more per square foot than just a few months ago. Since this trend is expected to continue, if you are considering moving your office, it is better to act quickly than wait; if you delay, you will only pay more.

  • Reduced Incentives: Recently, it was an office renter’s market and renters were able to shop for incentives that appealed to their situation. For example, some landlords offered tenant improvement allowances while others offered special rates to long term renters. These incentives are very soon to be greatly reduced as the vacancy rate continues to decline and spaces fill up. Once the rental market turns a corner, the incentives will vanish completely. Again, making it the best time for tenants to make any changes being considered for the near-term future.

  • Fewer Office Space Alternatives: With changes to the rental market, the choice afforded the potential renter will be reduced. Today, many renters are seeking to move to more flexible floor plans and smaller spaces. This may well leave a wealth of larger offices at increased cost per square footage available, but this may well be exactly what you want to change for your own office. Those seeking the perfect spaces for flexible office spaces and non-traditional spaces, such as serviced office space, may find themselves at a loss for locating the space that would have readily been available only a short time ago. A matter of weeks can change the market in this area and business people take advantage of their last days of incentives and broad selections.

As with any period of recovery, whether in the commercial office market or the general economy, it is difficult to see into the future. But trends today give us the best insight into where you may find your business rental needs in the near-term future. Today is the best time to make a move and only a few months from now may be entirely too late to reap the benefits remaining

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By: James Osgood

Office Leasing Tips , Office Rental , Office Space Negotiations , Office Vacancy Rate