Wednesday, July 18, 2012

What to Consider Before Signing an Office Lease

Renting commercial property proves expensive and is a tremendous responsibility. If you have never rented office space or buildings before, there are some important facts you need to learn. Change is exciting, and leasing space for the first time or moving an established business is a new chapter in a company’s history. Doing some legwork now will help ensure you’ll look back at this time with good memories, not regrets.

 1. CHOOSING THE PROPER SPACE FOR YOUR BUSINESS: The perfect way to judge is ask to examine the office space before you start negotiation to determine whether it befits your requirements or not. Make sure that you are satisfied with overall space and are able to meet all your needs. Insist on viewing all the empty offices just in case one comes with a store room as well as a kitchen.

2. WHAT IS INCLUDED IN THE RENT: Are there any special taxes, property fees, load fees, CAM or other fees? Any utilities or services (landscaping, security, etc.) are covered in your lease, or that you are required to pay on your own? If so, get them in writing. Make sure each fee is identified individually, how much each fee will cost you, and how often you will have to pay the fee(s).

 3. FLEXIBILITY OF THE LEASE TERMS: This first office lease will probably be one of the bigger commitments and liabilities of your business. Make sure the lease term is flexible and is within your budget based on current cash flow not future projections. Most small businesses start with a one-to-two-year lease, although in this economy, month-to-month lease may be more readily available.

4. WILL MY RENT INCREASE WHEN MY LEASE EXPIRES: How much can your rent (and any other fees) be raised each year? What is the maximum percent or dollar amount your rent and other fees can be raised each year? If there is a 1% cap each year on load fees, that may sound reasonable, but this does not mean your base rent will be capped at 1%. To make up for low caps on other fees, your landlord may try to stick you with a 15% rent increase.

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