By Alex Black
Leasing a Commercial Space
Leasing a commercial office space can be one of the biggest expenses accrued by a company, so it's important to do your due diligence when considering all the conditions of commercial leasing.
Lease terms and rent rates are your biggest negotiation points when it comes to lease agreements. It's usually suggested that small businesses should negotiate one or two-year term lease agreements with the option to renew in the future. You'll also want to factor in increases in rent over the term and renewal options, so you aren't unexpectedly hit with a rent increase without proper warning.
Working with a broker can help you in a number of ways, including negotiating with the landlord. It's also very important to consult a real estate lawyer. Real estate lawyers can usually recommend the best choice for you while protecting your best interest as you negotiate your lease with the help of your broker.
Other than the monthly rent payment you'll incur, be sure to know find what other expenses you'll incur beyond your monthly lease payment.
Most commercial real estate landlords will typically incorporate extra expenses into your lease agreement, including upkeep for shared facilities, maintenance fees, and more. Other things to consider are the utilities. These extra charges are typically the responsibility of the tenant, so you'll want to know how your utilities are measured. Are the utilities each individually measured or apportioned by space? Be sure to ask to see the hidden fees or extra charges, and detailed policies pertaining to the cost of utilities that are usually incurred by the renter.
Maintenance and Repair
Residential leasing can often place the burden of upkeep and maintenance on the landlord, commercial leases differ in that respect. Commercial leasing varies a lot in terms of repair and maintenance – some state that the tenant will be responsible for all upkeep and property repairs, while others say that the tenant will be responsible for systems like plumbing, air conditioning, and other systems.
Read the Lease
Make sure you read your lease agreement in detail and hire a real estate lawyer to help with walking you through all the clauses and fine print of the lease.
Protect Your Business
It's also worth negotiating and investigating potential add-on clauses to your lease in order to protect your investment and long-term business interests. These clauses might include:
Subleasing – This allows you to sublet your office space to another entity.
Exclusivity clause – This helps prevent your landlord from leasing to companies that are in direct competition with your business.
Co-tenancy – If your property’s anchor tenant moves or shuts down, co-tenancy can help you stay protected from losing customers, which allows you to break the terms of your lease agreement if the landlord doesn't replace the anchor tenant in a certain amount of time.
What if You Default on Your Lease Agreement?
If you would happen to default on your lease agreement, there are certain steps you can take to protect yourself. Find out exactly what the lease agreement dictates. Are you going to be locked out immediately? Will the landlord begin the eviction process? Can you negotiate with the landlord for more time to come up with the payment? Can you pay only this month’s rent amount instead of the full amount owed?
What are the alternatives?
What if after considering all of these factors, you are not sure that you want to commit to a long-term lease? Try renting office space instead. The executive suites facilities typically offer all of the amenities at a reasonable cost, the lease terms are adaptable and can be adjusted based on your business’s needs whether you grow or contract. Conference and meeting rooms can be rented by the hour, and team space can be rented by the day. Virtual offices are also a great idea if your team is dispersed or work from home a lot. Renting an office space is a flexible option for those business owners who are not ready to commit to a more rigid long-term lease.
New Executive Suites – come and feel the excitement!
Avalon Suites provides on-demand single offices, team rooms and virtual offices in Houston. We know Avalon is a partner in your businesses’ success. Where you says wonders about you and how you conduct business. It’s our job to make sure it says you’re at the top of your game, because, at the end of the day, we are only successful when you are.