Many entrepreneurs sign their first commercial office lease agreements with little-to-no knowledge on how to negotiate the terms and conditions. They find high-end, serviced offices and pay large sums for the space. As a result, they often end up overpaying for a space that does not fit their current needs. As a business owner, chances are, you have been there. To avoid going back, you need to learn how to negotiate a lease agreement in your favor before signing off on your next space. Then, you can grow your company and keep most of your profits at the same time. Continue reading to learn how to negotiate a commercial office lease agreement successfully.
Determine Your Ideal Term
To begin negotiating a commercial office lease agreement, determine what your ideal term looks like. Most landlords allow business owners to sign leases for terms up to 20 years. Typically, the shortest terms are 5 years. Many business owners have a difficult time deciding on a number in between these options. In order to do so properly, you need to review economic and personal factors. Moreover, you need to consider these factors early on. Landlords prefer tenants to sign longer terms and often convince inexperienced business men and women sign contracts in their favor. Owners of smaller businesses should avoid signing longer terms. If you are trying to expand your business, you do not want to limit your opportunities by staying in one office. Determine your ideal terms to negotiate a commercial office lease agreement successfully.
Compare Rental Rates Nearby
Another step to effectively negotiate an office lease is to compare rental rates nearby. Landlords want to receive the most money for as little services. After all, they are trying to make a profit too. To ensure that you sign a fair office lease agreement, research the costs of other offices on the market. If you find that most of the other office spaces nearby offer lower rates, ask your landlord to lower your rent. If they disagree to a price reduction, ask if they can lower the rent for at least a few months. Then, you can move into your new workplace without fearing the upcoming bill. To achieve this outcome, compare rental rates for other office lease agreements nearby.
Inquire About Modifications
Tenants who fail to review the modifications portion of their commercial office lease agreements usually have issues down the road. Many business owners need to make adjustments to office spaces. If you want to impress clients when they enter your office, you might change the carpets. Some business owners add reception areas to their workspaces. Others paint office walls to fit their style. While your modifications will depend on your business and goals, they are something worth considering. If you make modifications that do not comply with the regulations set forth in your lease, you could get hit with a hefty fine upon exiting. You could also lose your additions. Ensure that your lease lists specific rules and regulations regarding modifications. These rules should include who obtains ownership of improvements and fixtures when you leave the complex. Inquire about modifications to establish a fair commercial office lease agreement.
Establish An Exit Strategy
With the thought of leaving an office in mind, you need to establish an exit strategy in your commercial office lease agreement as well. Unfortunately, business has its ups and downs. Numerous factors impact the success of a company. Between economic challenges and market trends, it can be difficult to maintain a positive cash flow. When business owners cannot, they struggle financially. If you end up in an unstable financial situation, you could have trouble paying office rent. While capital loans pose options, you can avoid taking out a loan all together. Prepare for this unfortunate event by establishing an exit strategy. Earn yourself the right to cancel your term agreements if a poor financial situation arises. Then, you will negotiate an ideal commercial office lease agreement.
Get A Lawyer’s Opinion
Finally, hire a lawyer to review your commercial office lease agreement before you sign. While you may want to take matters into your own hands, the terms and conditions can be difficult to understand. Find a commercial lawyer who has successfully assisted other business owners in establishing quality leases. They can explain the terms and conditions to you. Moreover, they have more experience in catching unfair costs. Those who do not get a lawyer’s opinion usually end up spending more than they have to on a monthly basis. Find a reputable commercial lawyer to help you negotiate commercial office lease agreement terms.
Refrain from overpaying for a workspace by applying the top steps for negotiating a commercial office lease agreement. Firstly, determine your ideal term by considering various economic factors. Compare rental rates of other nearby offices and request reductions accordingly. Ask about modifications and ensure that they are included in your contract. Establish an exit strategy to prepare for any financial struggles you may deal with in the future. Lastly, get a reputable commercial lawyer’s opinion to avoid paying for unnecessary costs. Follow these steps to negotiate a commercial office lease agreement successfully.