Office Space Rental is one of the significant expenditures of a rising company. It makes sense then that negotiating for an acceptable lease is a challenging yet necessary process one has to take. Take note that there are several approaches you can adopt to obtain the best deal without undermining your finances or slowing down your business.
Regardless if you hired a tenant broker, do your research on the space you want to rent. Are there other companies eyeing the property? How long has the place been empty? These are aspects that can significantly impact your negotiation process.
And since there’s no such thing as a standard lease, you will find below five tips when negotiating the office space rental you want.
1. Settle Length of Lease Period (Term)
Property owners or landlords are usually amenable to grant long-term leases. In a way, this condition can be beneficial; however, it’s normal for the company to adjust. When this change happens, you’ll find yourself stuck in a lease with either a sizeable or small space for your business.
As a tenant, aim to negotiate a short-term contract with extension options. For instance, seek a two-year deal with a two-year extension option instead of a four-year agreement.
2. Manage Rent Hikes
When it comes to office spaces, it’s unusual to find fixed rent with long-term contracts. Typically, property owners expect yearly increases based on rate hikes found in the Consumer Price Index (CPI).
If the landlord requires rent hikes, see if you can arrange for a fixed CPI rent increase. For example, your monthly rent is $7,000 a month. Your second year will increase to $7,200 per month, then $7,400 a month on your third year.
3. Explore Hiring a Tenant Broker
Yes, it’s common to come across stubborn landlords with unreasonable requests. If you’re in this tight situation, you may want to look for alternative office space to rent.
A credible tenant broker, aka tenant representative, can help your company search for available spaces or industrial developments like the Gloucester business park. These professionals can give you a background and help you understand the dynamics of the market. Moreover, they can help you discover office spaces that satisfy your standards, set up viewings, and go with you to see these properties.
Tenant brokers likewise help their clients draft offer letters and deal with property owners so you can obtain a sensible lease for your company.
4. Discuss Office Space Improvements and Repairs
Meanwhile, please note that some contracts will include clauses that state tenants must reinstate premises to their primary condition.
See if you can modify the provision to say that you will return the office space in the same state at the start of your contract as a tenant. This condition excludes devastation by fire that isn’t the responsibility of the tenant and usual wear and tear.
Furthermore, if the property requires upgrading or enhancements, who is responsible for these repairs? Suppose you want fresh carpets, new paint colours, or re-arrange the layout of the office area. Take note that many leases state that tenants can only modify the property with the property owner’s consent.
Request for a provision that allows you to render alterations with the landlord’s permission and that consent will not be unduly conditioned, hampered, or delayed.
5. Be on the Lookout with These Provisions
Lastly, be on the lookout for these one-sided clauses that strongly favours property owners:
- The property owner restricts potential assignment or subletting
- The property owner expects the tenant to settle tax escalations stemming from the property sale
- The property owner has the right to rescind the contract at the landlord’s convenience
- The property owner rents the space ‘as is’ to waive compliance with the Americans with Disabilities Act or any environmental laws.
- The property owner demands a personal guarantee of the principal shareholders of the business
- The property owner transfers to the tenant additional operating expenses such as repairs, insurance fees, and building taxes.
Keep in mind when negotiating an office space rental, it’s best you carry a definite understanding of what you’re willing to consider and what you can propose. It is also best to have a tenant representative working on your behalf. Always document everything in writing when clarifying lease details that you don’t understand. While this will make the process longer, it will provide you legal protection in cases some of your negotiated terms get excluded in your contract.
It’s essential to study your lease carefully. The contract can possibly contain numerous details you’ll not understand. When faced with this kind of scenario, highlight each unclear point, and discuss it with your tenant broker or the property owner.
Our tenant representatives at OfficeFinder do this day in and day out for their clients. Contact us so we can connect you with one in your area. There is no cost for their services and no obligation to request info.