How to Avoid Catastrophes With Your Leased Office Space!

One of the big expenses that a company can incur is for their leased office space. On one hand, you expect to pay a fair market rent; on the other hand, you certainly want to keep your operational expenses as low as possible. Then there is the fact that there is no such thing as a standard rental contract! So you need to be aware of all of the considerations that enter into most such negotiations so you can be in a position to bargain for great terms and avoid any potential catastrophes if you took any of this for granted!

Here are some important facts of which you need to be aware in order to negotiate a great leased office space and avoid any unhappy conclusion in this regard.

• Lease terms are almost always negotiable - Don’t get locked into a long-term arrangement! Familiarize yourself with all term options available to you. Negotiate an arrangement that will best suit your unique business operational needs. There are several options that you can consider besides an ongoing long-term contract, which include: short-term with a renewal option; option for cancellation with advanced notice; and a long-term contract cancellation clause.
• Hire your own tenant representative - Here’s an interesting fact about retaining for your business the services of a tenant representative. These individuals are paid by the landlord no matter who else is involved in the transaction as the landlord’s representative, who is probably receiving a commission for their work, will have to share their typically 6% commission with anyone else retained and involved in the negotiations. So if a business elects to rely only on the information provided by someone retained to represent the landlord, that business is certainly avoiding the right for fair representation in the contract negotiations process. In addition, the landlord’s representative will collect the entire fee without having had any concern for the tenant’s needs.
• A tenant representative works on behalf of your business, performing any necessary work for your business in this process including an assessment of space needs, comparison of competitive offers and determination of any cost limitations as well as being able to draft any required documents for the negotiations process. Your tenant representative will do all of this and then get paid by the landlord when you sign the lease agreement.
• Become familiar with some of the exclusive fees and other expenses - Besides the rent, be meticulous in your examination of any contract agreement and see that fees and any other tenant expenses are very specifically listed and explained. Your familiarity with all of this will give you an ability to better negotiate any rental agreement.

As an example, if the landlord wants to charge you for any common area maintenance fees, don’t agree for percentage estimation. Make sure that you know the face amount of any charges to the landlord and the specific breakdown of square footage leased by you in comparison to the square footage leased by anyone else using any common areas. Be sure that you have input on any future incurred expenses such as the landlord’s desire to put up a new elegant and expensive chandelier in the lobby for which you will share the cost! Any decision like that should be yours and not just the landlord’s decision alone.

Another example of what to look at closely in the lease agreement is who is responsible for unavoidable ‘acts of God’ that could damage the premises and leave you without an area from which to conduct your business. Ensure that either the landlord is responsible for any ‘loss of use’ on your behalf if your business must temporarily relocate or that the contractual agreement reserves the tenant’s right of lease cancellation in the event of such an occurrence.

• Don’t waste time - Start as early as you possibly can with any contract determinations or negotiations. The earlier you either work to renew your lease or plan for relocation, the more options you will retain. Some arrangements will actually give you some type of discount if you renew earlier than required by the contract. If your decision is to move, then you will have adequate time to find another location for your business without losing any potential operations time for your business.

The ultimate reason why you want to consider all of the above facts in leased office space negotiations is to avoid any potential for an office lease ‘catastrophe.’ Last minute and difficult negotiations seldom work out for the tenant as the landlord is probably in a better position to resist any negotiations or requests from you, the business owner, as they know you have limited time to do much else other than remain where you are located.

Better yet, retain a good tenant representative well ahead of lease renewal time to work on your behalf so that you can completely avoid any problems at all and any possible catastrophes with your leased office space!

C. Michael Hunter is an expert in Dallas/Fort Worth commercial office space. To find out more about Plano Office Space, go to our main website at: http://lcrgusa.com/.