How to Lease Office Space

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Leasing space for your company affects profit, employee satisfaction and ability to grow. Plan ahead, know what you're looking for, and be ready to shop aggressively.

Things You'll Need

  • Attorney
  • Commercial real estate agent

Gauge what your space requirements are now and what they may be in years to come. A general rule of thumb is to allot 175 to 250 square feet of usable space per person.

Contact a commercial real estate agent for help in finding suitable rental space. Agents have the inside track on what space is coming on the market soon and can advise you on which properties are the best. Some firms specialize exclusively in office space leases.

Discuss needed improvements. Tenant improvements are subject to serious negotiation, particularly if vacancies are high.

Examine parking carefully. Will you have a number of parking spots set aside for your employees, or will they have to compete for street parking?

Reduce your costs considerably by sharing space with another firm, including office equipment, reception areas, meeting rooms and rest rooms. But know that sharing space brings less privacy.

Check out incubators--areas in which small-business entrepreneurs have access to low-cost office space. You may benefit from sharing expertise as well as office space. Do an online search, or start at the Web site of the National Business Incubation Association (nbia.org).

Consider all-inclusive executive office suites. Although the rate may be a bit higher, many suites come furnished and have access to office equipment and conference rooms, thereby lowering up-front costs for physical space and equipment to almost nothing. Many also provide a receptionist.

Read a prospective lease exhaustively. Review your monthly payment, the length of the lease, what the landlord is responsible for, any provisions for getting out of the lease early, and other standard clauses such as annual rent increases tied to inflation. Ask if the lease includes upkeep of grounds and other maintenance. Don't forget telephone lines, cable service, broadband Internet connections and other communication needs.

Review occupancy date, options regarding expansion, extension of the lease term, termination, contraction (the need to scale back), and first right of refusal on adjoining space, as well as security, reception area, amenities (lunch rooms, rest rooms, snack vending), access to conference rooms, elevator usage, and HVAC issues (such as who is responsible and what is the expected response time when a problem arises).

Find out about any restrictions on signage.

Retain the services of a real estate attorney who not only specializes in lease negotiations but knows your area and, preferably, has dealt with your kind of business before. A lease negotiation can cover tens, if not hundreds, of terms, and you want someone in your corner who has seen it all before.

Tips & Warnings

  • Don't be afraid to negotiate terms of your lease. With rental rates dropping, landlords may be hungry to rent their space as best they can.
  • Large businesses often go through cycles of layoffs; you may be able to find a company with extra office space it would be willing to sublet at a bargain price.
  • Don't lock yourself into a five-year lease if you expect your business to change dramatically in the next few years. Unless you're moving from existing space and know your needs fairly well, negotiate a short-term lease of one to three years.

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