Office Space Lease – Understanding The Basics

Before looking for new office space for your business and before any landlord allows you to move into a property, you must sign a lease agreement. This agreement is a legal contract between the owner of the property and an incoming tenant that outlines the terms of the deal they have agreed to.

Commercial leases are synonymous with being long and confusing, but the basics should include the following:

• The length of the lease and should there be an opportunity to renew for a further period. This should clearly outline when the lease commences and expires.
• Rental amounts and what the incoming tenant is liable to pay for. In addition, if there is an escalation in rentals.
• The deposit amount and clarity on whether a bank guarantee is acceptable.
• Tenant installation allowance (TI allowance) if any

Other points that the lease agreement should clearly outline are the permitted use of the premises, property insurance, maintenance costs, options to sub-let the premises and dispute resolution mechanism to name a few.
Before entering into a lease agreement, the type of lease should be agreed upon which would outline all the costs and responsibilities mentioned above. There are several types of commercial lease options with the four most common being:

1. A single-net lease – the tenant is responsible for paying property taxes and rent.
2. A double-net lease – the tenant is responsible for paying property taxes, insurance, and rent.
3. A triple-net lease – the tenant is responsible for paying property taxes, insurance, maintenance, and rent.
4. A gross lease – the tenant only pays the rent while the owner of the property would be responsible to pay for property taxes, insurance, and maintenance.

The typical commercial lease is signed for anywhere between 3 and 5 years, and can often run longer, especially on more tenant-specific buildings. As this is a medium to long-term commitment for your business, it is essential to do your research before making the final decision. Remember that this is a legally binding contract and getting legal advice is highly recommended should you be unsure of anything.

How can Robert help you negotiate the best terms for your commercial leasing requirements?