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Office Space Rental: Availability and Low Rates

Office Space Rental: Availability and Low Rates


Office Space Rental: Availability and Low Rates

by Bob Barber

The starting point for determining your operating costs under an office lease is identifying what services the landlord provides, what services the tenant must get directly, and who bears the cost. The following are common costs for office space:

Heating, ventilating, and air conditioning (commonly referred to as "HVAC"); cleaning and janitorial services, electricity, repairs, security.

Term of the lease. Landlords are typically willing to make concessions for longer-term leases. A company's needs may change, however, so try to negotiate a shorter-term lease with renewal options.

If the landlord pays for basic services but charges you for increases in the cost of rendering those services, ask how the landlord is calculating that increase. For example, some landlords may figure the base year for calculating the starting point of costs as one in which the building is not fully occupied (heat not necessarily fully on, not all lights on, and so on).

In this case, your company's moving in will naturally cause cost increases. Get the landlord to count the base-year costs as if the building were fully occupied and operational.

Repairs, improvements and replacements. Be aware of a clause that says that at the end of the lease premises must be returned in their original condition. Assignment and subletting. Companies should negotiate enough flexibility in the assignment and subletting clause to allow for mergers, reorganizations, and share ownership changes. Option to renew. Try to get the option to renew your rent at a fixed predetermined price, not based on a "fair market" price.

Right of first offer or first refusal for additional space. A right of first offer obligates your landlord to present any space that becomes available in the building to you first before marketing it to third parties. A right of first refusal on space obligates the landlord to bring you any deals he is willing to sign with third parties for space in the building and allow you to match the deal and preempt the third party. See Option to Expand Under Office Leases for more information.

In addition, some landlords will charge extra for services supplied other than on "business days" or "after hours." So look at this clause carefully and try to limit charges for extra services to those that are truly extraordinary and not to be incurred on a regular basis. This can be of particular importance for a startup business, where workers often spend nights and weekends working.

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