Beware of Office Space Nightmares!

In most cases, the most practical and cost-effective means to acquire an office space is through an office lease. Unlike purchasing, it does not create financial constraints because of lower monthly payments. This is important because if a business is just getting started, it would be important to not face financial difficulties due to an…

In most cases, the most practical and cost-effective means to acquire an office space is through an office lease. Unlike purchasing, it does not create financial constraints because of lower monthly payments. This is important because if a business is just getting started, it would be important to not face financial difficulties due to an excessive mortgage payment.

While leasing has its benefits, there are pitfalls as well which could have the potential to become a tenant's worst nightmare. When leasing an office space, there must be a contract that is usually drafted by the owner. While it is designed to protect both parties interests, it can also become a double-edged sword to unwary tenants. To avoid any future problems, it is important to examine closely the renter's side of the contract before signing the document.

Lease Terms

The length of a lease returns to the amount of time that a tenant can occupy the concessions. Although it may appear to be a small factor, it is actually very important as it directly affects the monthly fee because a longer term lease usually guarantees the lessor a continuous stream of revenue. From a lessee's perspective, the terms basically depend upon the company's business needs. Although longer terms can mean a lower monthly cost, it also means that a company is locked into that particular space until the contract expires.

This can create a problem if the business expends and the current space can not support such growth or if the location is not accessible to newly targeted clients. In a worst case scenario, if a business is forced to close its doors, they are still obliged to fulfill the terms of the lease to avoid a breach of contract lawsuit.

For small companies that are still unsure, it would be more advisable to have a short-term lease. Although the rent may cost more, it offers better flexibility for making future adjustments and fine tuning business needs. Following are some items to have included in a lease to allow for a company's future growth potential.

  • Sublease – A clause worth negotiating is a sublease as it gives a tenant the right to lease a portion or even the entire space to another company. Although innocent enough appearing, it actually provides great protection to a renter. It would allow a start-up company to occupy what is initially needed and sublease the remaining area to another company until more room is needed.
  • Maintenance and Repair – Maintenance and repair to the space is naturally a renter's obligation; however, there should be a limit as to what is actually covered. Ideally, the lessee's responsibility for maintenance and repair should only cover the actual rented space. Common areas should be the responsibility of overall building administration.
  • Renovate – Because an office will be used commercially, a renter should be able to modify or remodel that rented space to a certain extent in order to serve business needs. If modifications are allowed, the contract should also state whether or not the lessee is required to restore the space to the original condition once the contract expires.

It is important to ensure that an office lease is beneficial for the lessee, making it imperative to closely examine a contract to avoid clauses that may cause a conflict of interest between the landlord and the tenant. The tips referred above are just some of the important aspects of a contract that a lessee should consider before signing an agreement. It is the best way to avoid an office space nightmare!