What to consider before signing a lease.

Now that you have narrowed your possible spaces down to a few that, for the most part, have met your basic requirements (budget, type, location and size), it is time to evaluate and decide which of these will be the best fit for your company.

Every small business is different- but every small business owner typically looks for ways to reduce risk.  Since leasing office space results in a very large large financial commitment and can represent a significant portion of a business’s monthly operating expenses, we have a put together some tips for small business owners to follow when evaluating and deciding which office space is right for their business.

The lease. The lease is extremely important document when considering a potential landlord or office space. All issues that arise throughout a tenancy will defer back to what is stated in the lease. Commercial office space leases are written by the landlord and their attorneys. They have years of experience writing language to cover all potential circumstances that could occur before, during and after your tenancy. This means that most leases are written in favor of the landlord, how much so will vary, we will discuss what to look out for and things to consider when reviewing the lease of a potential landlord.

Pricing Models. There are several different ways that landlords structure lease rates. What is included and what is not will vary from property to property, landlord to landlord- we will compare the pros and cons of the different pricing models.

Business Growth/Decline. Although you do your best as a small business owner to be able to forecast revenue and expenses, sometimes there are extenuating circumstances that influence your business’s success or failure. When negotiating a lease agreement, know what your best and worst case scenarios are and how they will be played out as per the lease agreement. For example, if your business fails are you personally liable for the remainder of the lease payments? Or, if you land a few big deals and have tripled in size will your landlord be able to accommodate your growing business?

Lease Term. Many small business owners will negotiate heavily for short term leases with the idea that it reduces risk and gives them the ultimate flexibility. While this may be true today, there are some things to consider that could make a short term lease disadvantageous. We will share insight from the landlord’s point of view on this matter and discuss how to reduce your risk and still reap the benefits of a longer term lease.

It is not uncommon to get to this step of the leasing process and have to eliminate all of the possible spaces and go back to the searching process.  Time is a great negotiating tool, so give yourself plenty of it. The last thing you want to do is settle for a space (or landlord) you don’t like because you ran out of time to find something else.

David Merrell is the president at North Forest Office Space

North Forest is a leading expert in leasing office space to small businesses.  They lease office space from as small as 130 square feet of executive space up to an entire 15,000-square-foot building, allowing for an office that can grow with the customer’s business.

One Response to What to consider before signing a lease.

  1. Nice post, very helpful. Thanks for sharing.