There are many options and terms available when leasing office space. You may know precisely what you want in a lease. For those who do not, the following covers some of the areas which you will want to address in your lease negotiations.
Escalation clause.
This clause spells out how much the rent will escalate with inflation.
Ask for documentation on what the percentage has been over the
last five years.
Renewal option.
Under this clause, you have the option of renewal under the original
base rent.
Maintenance.
The lease should spell out what repairs or maintenance items you
will be responsible for under the terms of the lease. For instance
if the door lock jams, who is responsible to repair it? Is the
lessor, or management company, responsible for the cleaning service;
and how often do they clean? Even minor items, such as duplication
of door keys should be addressed. If the building has a mandatory
security system, who is responsible for paying for it and maintaining
contact with the administrators?
Insurance.
Often, the lessor will request proof of insurance coverage before
the move-in. The lessor must know that you are covered for any
damage you may cause during the move-in, as well as have adequate
liability coverage for injuries. After you move in the same usually
applies. The minimum coverage the lessor expects should be detailed
in the lease.
Move-in/delivery regulations.
If you move into a multi-occupancy building, it is possible that
the management company will have rules regarding hours in which
you may actually move-in and specific doors and elevators which
you must use to do so. In addition, there may be restrictions
on times and types of deliveries to your office once you have
moved in.
Storage Space.
If you require storage space, you should determine if the landlord
has such space available and the costs associated with its use.
Or will you be allowed to build such an area in the space you
lease.
Sublease.
The lease should clarify if a sublease is permissible, and the
specific terms, if so.
Restrictions on Use.
The lease should spell out any restrictions for use within the
lease space. For instance the landlord may restrict use of certain
type of equipment within the space.
Improvements.
There may be improvements which you agree to as part of the negotiations
and these should be reflected in the lease. The ownership of these
improvements must also be addressed in the lease. It should specify
what happens to them when the lease terminates. On the other hand,
you may want to make changes within the space you have rented.
The lease should address your rights, and the extent to which
you can do so. This could be as simple as putting up a non-bearing
wall, or installing a security system. If you should decide your
space would better serve you with most of the walls removed, will
you be able to do it? What will the restrictions be? Will you
be required to reinstate whatever you remove at the end of the
lease? The reality of many of these things depend on the length
of the lease - the longer the lease the more you can ask for.
Heating/Air Conditioning (HVAC).
It is important that the hours of operation for the HVAC be addressed,
especially if your office works outside the normal 9:00 to 5:00
hours and on the weekend. It is not unusual for some buildings
to operate the HVAC until 7:00 p.m. during the weekdays, and not
at all on the weekend. It's a little hard to get much work done
if you're too hot or cold. It might be possible to request installation
of an individual control thermostat for your space, or it may
be provided by the lessor. The lease should also spell out your
responsibility for the heating and air conditioning. Is it a percentage
based on your square footage? Does it include the common areas?
Even if you have an individual thermostat in your space, you will
likely still be responsible for a percentage of the common areas.
This is one of those items you should find out in your initial
research.
Renovations/Repairs.
If there are items which you and the lessor agree should be done
prior to, or even after, move in, these items should be included
in the lease.
Termination.
The terms of your right to end the lease is crucial, as well as
in which circumstances the landlord can do the same.
These are all items which are crucial to a lease which you can live with. It is unlikely that the landlord, or management company, will automatically cover most of them. You must know what your needs are and request that they be included in the negotiations and the final lease agreement.
Consultation with an attorney during the lease process is also important. Often the lease will contain language which is entirely foreign to you. You certainly want to have an attorney look over the lease prior to signing it; and it is in your best interest that you thoroughly brief the attorney on the items which are important to you and those areas which you and the landlord have agreed on (i.e. improvements), so that the attorney can make certain that everything is properly addressed in the lease.
Most importantly, make sure you understand the terms of the lease before you sign it. It is a legally binding agreement, and not usually subject to revisions after it is executed.
