If your company has grown out of its current office space or you’re looking to relocate, you likely understand the complexities of leasing office space. You want to make the best choice possible, but you want to do so while keeping costs as low as possible. Choosing office space should not be taken lightly as it will be you and your employees’ second home for quite some time.
You’ll want to enlist the help of a commercial real estate firm to guide you through this sometimes arduous process. A commercial real estate agent can walk you through the details of a potential lease and spot issues that could cause problems down the road.
When evaluating new office space, there are several things that you and your real estate agent should keep in mind.
There are typically three types of leases used in a commercial setting: a full service lease, a gross lease, and a net lease. While there are other types of leases, these are the three most commonly used.
A full service lease is an agreement where the tenant pays a price that covers insurance, taxes, common area maintenance, utilities, as well as janitorial services. The tenant is also responsible for increases in operating expenses each year.
In a gross lease agreement, the tenant pays a price that covers insurance, taxes, common area maintenance, utilities, and janitorial services. With a gross lease the rent increases by a certain amount each year to account for increases in operating expenses. Therefore, in a gross lease, the risk of high operating expenses is transferred from the tenant to the landlord.
With a net lease, the tenant’s rent amount covers all expenses, except janitorial and electric services, which are paid directly by the tenant.
Ensure that your real estate agent is thorough in examining and communicating all lease terms so that there are no surprises as it relates to unexpected expenses.
You’re interested in renting an office space, but what exactly does that include? Will you have access to common bathrooms, hallways, and elevators? Ensure that you’re clear on exactly what areas are included in your lease and how the landlord came up with the quoted square footage and whether any of this space is considered common to other tenants in the building.
It’s incredibly important to understand who is responsible for common maintenance tasks. Who will cover the costs of an air conditioning repair or a roof leak? It’s also a good idea to learn how responsive the property management company is based on talking with other tenants in the building where you’re interested in leasing.
If your business relies on foot traffic, you’ll likely want to invest in a sign to lure in potential customers. Be sure that your lease allows for you to put up a sign and if so, pay careful attention to any size restrictions.
Escalations are simply permissible rent increases over a period of time. It’s important to understand how these increases are calculated so that you’re not surprised when your rent goes up substantially.
Depending on the size and age of your business, you may want to negotiate a shorter lease term so that you’re not locked into an agreement for a long period of time. Keep in mind that the shorter the lease, the higher your rent may be.
An exclusivity clause is a clause that prohibits your landlord from renting an office space to a competitor of yours. Depending on your industry, there may or may not be issues with having one of your competitors in close proximity to your office space.
If the legal jargon mentioned above is confusing to you, Morris Southeast Group can make it simple. With over 35 years of commercial real estate experience in South Florida, we’re confident that we can help you find an optimal office space to better handle your company’s growth.
Give us a call today at (954) 474-1776 to speak with one of our experienced agents.