Tag Archives: office lease

What to Consider Before You Lease Office Space

office space for leaseMaking a bad decision when it comes to choosing office space can have negative repercussions for any business, including loss of customers and a big impact on your bottom line. As many landlords prefer three to five year leases, it’s essential to know what you’re looking for before you lease office space and sign on the dotted line. Find the right office space, make the best decision for your company and start making money.

Use a Tenant Representative to Lease Office Space

Choosing the wrong broker, or not using one at all, can add up to a very expensive error. Tenant representation is essential, but you don’t want to rely on a broker with a conflict of interest, such as one who represents both the tenant and the landlord. Use one who strictly represents you as the tenant, which ensures that the broker remains true to their fiduciary duty. You wouldn’t use an attorney to represent bother parties, and the same holds true when signing an office lease.

As a business’s office space is usually one of its biggest expenses, having the right broker on your side can often help to reduce the company’s bottom line and also help protect its interests in a number of other ways.

Determining Priorities

Before signing an office lease, have you considered all of the short and long-term priorities of the business? Ideally, you should have an office space planner conduct a space program to determine your size needs including aspects like floor load capacity in order to support heavy equipment. Your tenant rep can help you with finding one and very often it will not cost you anything. Landlords provide this as an incentive to get you into their building. You may also want to find a space to lease within a larger complex that allows for future growth.

Understand Associated Costs

In addition to monthly rent, make sure you understand all costs involved, such as utility costs, common area maintenance fees, Internet and telephone installation costs and possible extra HVAC (heating, ventilation, and air-conditioning) costs for running your business after hours.

Both you and your broker should inspect all documents thoroughly as they are designed to benefit the landlord and make them money, not you.

Take Your Time

Not giving yourself enough time to make the decision and to go through the entire process of securing an office lease is one of the biggest mistakes office tenants make. You need time to explore the market with your tenant rep, tour facilities and interview landlords. Most tenants tend to significantly underestimate the time it takes to complete each stage, whether renewing, moving or starting fresh. Depending on your space needs and how complex your technology, the office leasing process may take 6 to 12 months or longer just to find and negotiate a deal.

Taking these considerations to heart will help you have a positive outcome when you lease office space.

Related: Top 15 mistakes Tenants make When They Lease Office Space

By: James Osgood
OfficeFinder

Expansion Office Lease Clause – Know What You Are Getting

You are negotiating an office lease with the landlord for the office space you have decided you would like to lease or rent. Your letter of intent, outlining the business terms, includes  an expansion option to meet your growth expectations. Hopefully you have a good office tenant representative, like the ones we have at OfficeFinder, to help you through the process. In any case, you need to understand the different types of office lease expansion options available to you. It sounds simple, but it is not.

Was the agreement for a ROFN, ROFO, ROFR or Pocket Space? They are all expansion options, but mean very different things and will subject you to very different rights under your office lease.

ROFN – Right of First Negotiation gives the Tenant very few rights other than to negotiate a new deal with the landlord. You can be assured of the expansion capability so long as you are willing to agree to whatever the Landlord is asking. In other words, you pretty much have no rights.

ROFO – Right of First Offer or Opportunity. This also give the Tenant very few rights. It simply means that you get the opportunity to be first in line to negotiate with he landlord, but once again, you are still at the mercy of the landlord and the terms he wants.

ROFR – Right of First Refusal does provide the Tenant with rights. Specifically the right to match a bona fide offer to lease within a certain period of time. This is the best option so far. you get an opportunity to meet the terms that a 3rd party is wiling to pay for the space, guaranteeing that you will get a market deal of the expansion office space.

Pocket Space is space that the Tenant commits to take either after a period of time or when they start to use it and is generally included as a part of the original office space premises. This option is good for you only if you are sure you will be growing into the additional space within the time period specified or sooner, usually within a year or two, or when you start to use the space, whichever occurs first. This can be a good option for fast growing companies by providing them with the flexibility they need to expand.

Having a clear understanding of these various terms will help ensure you are getting the office space expansion option you think you are getting. These various types of expansion options vary market by market and vary based upon market conditions. Contact us to engage the services of an experienced office tenant rep who knows the market and what options are available. It won’t cost you anything, but will save you from making costly mistakes and also ensure you get the best deal possible.

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