Leasing office space requires determining your business’s needs, including a budget and potential for growth. The cost per square foot of a place varies according to the location, amenities, and building quality. Look for a lease that allows for assignment and subleasing to maintain flexibility. Ensure the landlord discloses a renewal rental rate early enough to give you leverage in negotiating.
Termination
If you anticipate selling your business or need to relocate before your office lease expires, your contract must allow you to sublease or assign the lease. With this ability, you could be able to leave your current space before the end of your lease term. During office lease negotiations, businesses should focus on securing low base rent. To reserve a competitive rate, conduct market research to ensure fair prices. Avoid requesting concessions that cost landlords money, such as requests for property improvements or below-market annual escalations. For those looking to maximize their workspace and avoid the hassles, an office space rental Quincy MA, is a terrific alternative for enterprises and entrepreneurs.
Base Rent
Leasing an office space is one option to consider when starting a business. It has pros and cons but ultimately boils down to your business needs and risk appetite. Commercial real estate leases are typically structured on a square-foot basis. In addition to base rent, landlords may charge ancillary costs such as property taxes, utility charges, and insurance. The best way to understand the commercial leasing process is to work with an experienced chartered surveyor.
Lease Term
The length of the lease term will impact your business. It will be important to review various office space lease terms before you make a final decision.
A typical commercial real estate lease includes a provision for annual escalations in either the base rent or common area maintenance (CAM) fees. It will help to mitigate rising market rental rates over time. Some landlords will also include a clause that gives them the right to restore structural elements after a tenant leaves. If this is included in the lease, specify what is considered structural so you aren’t surprised by an expensive rebuild.
Rent Escalation
Depending on your lease terms, rental prices may increase over time. It could be based on inflation trends, rising operational costs, or other factors. Fees for things like utilities, maintenance, and security can rise. Your lease may include an operating expense escalation clause that allows your landlord to pass these increased costs on to you. Inflation-indexed escalation formulas calculate rental increases using the Consumer Price Index (CPI). These formulas should limit the tenant’s share of expenses to a reasonable percentage of the building’s total costs. It ensures that you are not paying more than your fair share.
Tenant Improvements
A landlord may set aside a tenant improvement allowance to assist tenants with buildout expenses. This cash is not a loan or credit, and it’s negotiated into the lease agreement before the start of construction. Be careful not to spend more than the agreed-upon budget for a buildout. You may be responsible for any expenses beyond that amount. You must also know you can’t take these improvements when leaving the space. Review the lease with a fine-tooth comb to understand this detail. Also, avoid any clauses that hold you responsible for repairing things beyond normal wear and tear.
Subleasing
Many small businesses and entrepreneurs look to sublease office space for various reasons. This option saves them money while benefiting from shared customers, resources, networking, workplace diversity and a reduced carbon footprint. One of the most common reasons for office space subleasing is downsizing. If your company’s sales have dropped and you no longer need the extra space you currently rent, it can make sense to sublet the area and earn some income to offset your overall rental costs. However, it’s important to determine if your commercial real estate lease allows for subletting. You should also find out about any restrictions or conditions that may apply.
