#5: CRITICAL OFFICE LEASING FACTORS BESIDES THE RENT
"Expect only what you inspect." - Anonymous
No tenant ever fails to consider the amount of rent to be paid or the location of an office space before signing a lease. Most tenants, though, fail to investigate thoroughly dozens of other factors that often make the difference between a satisfactory and unsatisfactory lease.
Even in the simple case of location, you may think the geography's fine. On your visits between 9 and 5, the neighborhood looks OK, too. What about the neighborhood at 7 or 8, or even 10 p.m.? Will employees who work late be safe leaving? What about weekends?
Building maintenance is a vital element in determining your satisfaction anywhere. It looks OK to you, but what's stipulated in the lease? What about exterior building and grounds maintenance? Landlord performance provisions should be specified. Who pays for building repairs? For repairs in your office? Who pays for your office bathroom supplies, for light bulbs?
Beware of government offices
If utilities aren't included in your rent, exactly how will they be figured and apportioned? What about after-hour utilities? Is heating or air conditioning adjusted uncomfortably after 5?
How will your rentable area be measured? Will you be paying for space taken up by utilities, columns, etc.? What will happen if larger tenants in the building need to expand? Where will you be moved? Will the space be as good, the view as nice, access as convenient? What's the current status of larger tenants in the building? Who are they? What kinds of people come into the building to do business with other tenants? Is there a welfare office in the building?
Speaking of government, government offices may mean demonstrations, pickets, media crowds, all of which may disrupt your business or your customers.
What's the level of elevator service in the building? Are there an adequate number? How fast is it? Are stairways and hallway restrooms locked for security?
Have a way to get out
Where will you park? If the building has a parking garage will you receive a number of free spaces with your lease, or reduced fees?
Who will pay for your moving costs? In a soft market, landlord participation in costs to move you in, free rent and parking spaces are not unusual lease perks.
Never go into anything without knowing how to get out. What are the lease commitments about subleasing or outright termination? Watch out for the word "reasonable" in a subleasing clause. Define "reasonable" in the lease.
A key element in any new lease is the build-out allowance for your space. Is it really adequate to do what you want? Whose contractor will do the work? Will there be three bids? If the work costs less than the allowance who gets the savings?
Do you want to share an office building with competitors? If they're not there already, will the landlord include exclusivity for you in the lease?
Put an expert on your side
The above represent a small sample of the extraordinary number of details that can be involved in a satisfactory lease. You should consider every detail before signing a lease. You have no negotiating room later.
The landlord budgets in your rent an amount for brokerage commissions. Since you're paying it, you should see to it that at least some of this money works for you, rather than going 100% to the landlord's broker whose interests are the landlord's, not yours.
MalmoMemphis Real Estate represents office tenants. When we represent you there
will never be any question of whose interests are paramount in
negotiations. We are your expert, independent advocate.
The 'Tenant's 10-Point Guide to Leasing Commercial Space'
is copyrighted by MalmoMemphis Real Estate, Inc., (MMRE) and may not be
reproduced without the expressed written consent of MMRE, and the
inclusion of notice that the material is 'Copyrighted by MalmoMemphis Real
Estate, Inc.' |
