Things to Consider While Leasing Office SpacePosted by halsey on January 23rd, 2020 Are you thinking of starting a new business or expanding your current one? Renting office space may be the best idea when you have less financial backup or returns from your business. Finding a suitable place and finalizing it can take months. The search process has to be started twelve to eighteen months before you intend to move in. Commercial leases are more complicated than residential rental agreements. Hence, the process of leasing office space needs to be carefully done. There are chances of getting into the wrong lease agreement and it could be very risky as you may have to end up using your capital resources which could have been used for further growth in business. So let's look at the main factors that have to be considered while taking office space for lease.
The entrepreneur or the management of the company needs a clear vision so that they will be in a better position to forecast where the company would be in the next three to five years. Accordingly, they will be in a better position to figure out what kind of office space is needed for their business.
Location is one of the most important factors to be considered for good returns from the business. Clients should be able to find the office easily. For example, if you keep a fashion boutique in a village, the number of customers approaching the boutique will be less compared to one in a city with a good view. Though a good location would cost more, it would provide other benefits like less transportation cost for transporting the inventory for a business, getting talented employees, etc. But, while opting for the office space in the best location, the cost of living needs to be considered.
A lease can be in either of the following two forms:
Full service or gross lease is usually quoted more than a triple net or net lease.
Generally, a security deposit may be collected for a period of one to six months of rent, which can be paid in cash or letter of credit; as per the suggestions from the landlord.
The premises and the infrastructure should be apt for the business you are dealing with. Infrastructure and the amenities of the building have to be carefully evaluated to avoid embarrassment later on; that is when the clients, investors, or employees come in.
Determine whether you need office space for yourself or can you go for a coworking option, though having your own address is an advantage for your business.
Usually, landlords try to lease out the office space for a long period of time. But, if you are new into your business, you should try to lease for a shorter period of time such as three or five years. After that, as per your business needs and growth, you may either continue with the same office or go for a better or smaller one. You may even think of changing the location at that time. So if you lease for a longer period of time, then your business may get into losses by giving rent for space that you won’t need anymore.
Check how much time you will have to wait before the space is move-in ready and also, about the responsibilities while moving out. Get informed about the penalties for breaking the lease, if needed, and check whether you will be able to afford it.
If the office location, infrastructure, and premises seemed to be ideal for your business, then check out whether the rent is affordable as per your budget.
Before going for negotiation, check out the rent with similar buildings in the same location, with similar facilities. Doing this would also help you to have the option to negotiate with other options at the same time. Check carefully where your competitors are located in the same building or area, especially if you don’t prefer to be located very near to your competitor.
Negotiation is possible but make sure that you don’t negotiate for Class A building by comparing with what you can get in a Class B building at a different location. Negotiation can be done mainly for the following:
Basically, ask for what you want.
Getting help from an expert commercial real estate broker, who can make the process easy as expert brokers or agents know the market well. Brokerage fees are paid by the landlord.
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