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A Few Things to Consider Before Signing an Agreement for Office Space for Lease

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Renting office space can be exciting and overwhelming all at the same time. In some of those anxious moments, it can easy to get caught up in all the excitement and sign a lease agreement that has unfavorable terms.  Since the success of your business largely depends on the right rental terms, you’ll want to check out a few important details whenever you are considering office space for lease.

The type of lease that’s being offered can make or break your business, as some could result in your paying large additional charges you weren’t prepared for. The common types of commercial leases are:

  • Percentage lease, which involves you paying a base rent in addition to a percentage of your monthly sales (retail leases)
  • Net lease that includes base rent and a nominal charge for taxes and insurance
  • Double net lease that requires you to pay rent in addition to the entire cost of taxes and insurance
  • Triple net lease which mandates that you pay rent, taxes, insurance and maintenance fees
  • Fully serviced lease or gross lease in which the landlord pays for additional expenses and then passes them on as a “load factor and increased from a base year.”

When choosing a fully serviced lease, it’s important to understand what the load factor and base year means. It is essentially a way to calculate the total monthly rent when a tenant has usable square footage in addition to common areas. For example, a business could occupy space in a building where stairways, restrooms and entryways are common space. In this instance, the load factor covers the expense associated with maintaining these areas, spreading them evenly among all who use them. The base year is the year in which you must pay for any excess expenses over the amount for that lease year. You have to be careful that the base year is current or in the future when signing a lease.

Although you may be offered a deal for signing an extended lease, if you’re a startup or growing business, you should be leery about doing so. That’s because you just might find the needs of your business change a great deal over the first couple of years. For this reason, you should consider a short-term lease that’s between one and two years if you are a brand new company.

It’s also a good idea to ask about initial improvement allowances, remodeling or redecorating when signing a lease. Most long term leases will include a tenant improvement allowance. Make sure you know if that is on a rentable or useable square footage bases. It can make a difference of 15% or more. You may choose to build cubicles, add new carpeting or paint the walls once you settle in, so you need to know if this is something that’s allowed. Many times, minor modifications are allowed as long as the structural integrity of the building is not altered in any way.

When it comes to choosing the right office space, the terms of a lease are every bit as important as the location. Your best bet is to have an Office Tenant Representative on your side. There is no additional cost to you, so it is a no lose situation. You will save money and avoid costly mistakes. To find office space with exactly the right terms for you, contact us today.

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By: James Osgood

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

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