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How To Negotiate Commercial Office Leases For Small Businesses

Once a small business owner has determined that the location, square footage, lighting and overall design and appearance of potential office space is suitable there remains a myriad of questions that should be addressed prior to the lease of office space. The forward thinking small business owner will insure that as many questions as possible are addressed in the lease before affixing any signature to the lease agreement. Anticipating changes and addressing responsibilities is a necessity when negotiating for commercial office space. Obviously the basic cost of occupying the space is a consideration, but there are a number of issues that require clarification in addition to the basic cost of the space. Suitable answers to the following questions are essential if a successful relationship with the leaser is to be established.

What is the term of the lease? How do I terminate the lease if I desire?

How long is the present rental rate applicable and what notifications are provided if rent is to be increased? How much notice will I receive if rents are to be increased? Do I have the option to discontinue the lease if rental rates become excessive?

How are electrical, gas, cable, water, trash disposal and any other additional utility or operating expenses calculated and who is responsible for payment?

How will the future rent rates be determined if an extension of the present lease is desired? Can I expect some preferred customer incentives for a renewal?

Who is responsible for snow or debris removal in the event of a weather event?

How much parking is available and how much will be allocated to my business? Where is it located?

Is additional space available for my business should I desire to expand?

Am I able to sublet or share office space with another company if that becomes necessary?

What external or internal maintenance, if any, am I responsible for? How is office cleaning accomplished by other tenants?

What fixtures, appliances or office equipment can be accommodated by the present electrical or cable services?

Are there a sufficient number of electrical and computer outlets. Is Wi-Fi computer service available?

What insurance coverage is included in the rent?

Only after ascertaining the answers to the above questions can the true cost of the rental space be determined. The opportunity to negotiate depends on the amount of office space available in the area as well as the occupancy rates of the present facility. Keep in mind that negotiating before signing the lease has a much better chance of success than trying to correct some oversight after signing. A quick study of prevailing rates in the area might offer comfort that the best deal is being accepted. It would also be helpful to discuss how accessible and responsive the owner or management company is with present tenants. They may provide additional information or insights that can be used to negotiate an acceptable leasing agreement. The prepared small business is in the best position to negotiate an arrangement that will prove suitable and avoid the potential angst that may be generated by not fully exploring and understanding the terms and conditions of a lease.

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