Navigating Commercial Office Leases For The First Time
If you're looking for your first commercial office space and think you've found a great place, hold up. This is not the same as signing a lease on an apartment where what you see is what you get for one monthly rent. Commercial space includes a few factors that go into determining what you pay. Commercial spaces are also more negotiable than residential leases, though, so while it might seem like there's a lot you have to take into account, in the end, it can help you get a better deal.
What Is the Rentable Square Feet Figure?
When you look at office space, ask about the rentable square feet. Not just the square feet of the office, but rentable. This is because what you pay per month will be determined not only by the size of the office you're actually using, but it also includes costs for a percent share of the common areas. Basically, on top of your real rent, you have something called load factor that's basically money you chip in for upkeep of the lobby, elevators, and other common spaces. It would be a shock to think your rent would be one figure only to find out it's actually bigger once you see the lease, so ask up front about that load factor and rentable square feet.
What Additional Fees Are Required Per Month?
Some leases require that tenants pay the taxes and insurance (and often the maintenance, in addition to the load factor) that the landlord owes, too. These costs are often required by what are called NNN leases. You may be required to show proof of liability insurance to rent in the building; while that wouldn't go to the landlord, it would still be a required ongoing cost. Maybe your utilities are included in the rent, or maybe you're responsible for your own phone setup and charges. You need to know everything up front before you sign. A good landlord will be able to clearly spell out what you'll need to pay.
Can Load Increases Be Capped?
Those load factor costs are a separate cost from your rent, and they can increase rapidly. One of the things you might want to ask when negotiating the lease is to cap the increases at a certain dollar amount or percentage per renewal. That can help you control your costs, which is especially important for new businesses that may still be finding their footing.
And of course, always have a lawyer look over the lease before you sign. Good office landlords know that signing the lease is a huge deal for new businesses and will encourage you to proceed cautiously. You want to have a great professional relationship with your landlord, and knowing how to navigate the lease signing is vital for avoiding misunderstandings. Click here to learn more about commercial office leasing.