Commercial Property Leases

 

If you utilize a broker during your hunt for office space (which you should) the leasing process will be easier. They are trained to understand rental contracts and work in your best interest. There are many different kinds of brokers in commercial real estate, each with their own specialty.  Whether you have a broker or not it is important and beneficial to you to brush up on your knowledge and rights as an office tenant.

Review your lease THOROUGHLY

A lease is a contract that must be signed, just as any other contract you should review it and make modifications that you see fit. A landlord wants to protect themselves against costs, but does their lease protect you? A “standard” lease that your landlord may hand over to you does not mean that it is fair to you as a tenant. Remember, they are out to protect themselves and you must do the same.

Consider the leasing process a negotiation. The landlord has their standard lease that can be seen as a “wish list” of sorts, you should review this list, and request modifications. Most landlords, with this not being their first rodeo, will have a predetermined response for most lease clauses and your desirability as a tenant may often dictate the willingness of the landlord to amend their standard lease.

If a larger client wants to rent your office space, does the landlord have the right to move you? If so do they cover the cost of the move in full or only partial, what if the office space isn’t comparable? These are all things that should be considered while reviewing your lease so you have a clear understanding in worst-case scenarios.  

Privacy

Certain office tenants, such as lawyers, therapists, or doctors, have a higher than average expectation of privacy in order to protect their clients. In emergency circumstances, a landlord has the legal right to enter any rented premises without notice. This being the case a landlord also has the right to enter the office space in non-emergency cases for valid purposes. Your contract should have a clause that states how much notice needs to be given, usually it is anywhere between 24-48 hours.

Does your lease address the potential issue of your landlord’s right to show your space? Some rental clauses state that as you are close to the expiration of your rental term, your office space may be shown to potentially interested tenants. Depending on the rental agreement the process can begin anywhere from 6-12 months prior to the expiration of your term. Be sure to check if the landlord must give notice prior to showings so as not to disrupt your business.

RENT

Base rent, does that include any utilities or other amenities? Does your rent go up at the end of your lease term, and if so by how much? Is there an option for month-to-month leasing after your initial term is over, or do you have to move out/renew? Unforeseen circumstances are always a possibility, both good and bad. If something happens that you need to vacate the premises does your lease allow you to sublease your office space and are there certain provisions involved?

Your business is unique, and so are it's needs. Don't be afraid to ask for what you feel would help your business thrive. Of course, not everything is negotiable and your landlord has the right to refuse any request they deem fit, but it never hurts to have all of your ducks in a row before signing a lease. Speak with other business owners to see what provisions you may want to include.