Article: June Campbell


The Small Business Library

March 10, 2000

Tips for Negotiating an Office Lease

Unless your small business is home-based, and will forever stay home based, one day you will be faced with the onerous task of negotiating a lease for your new office space. Your office space (and your office lease) are among the more significant business decisions you will make, so be sure to exercise due diligence. Canadian Real estate broker Gwen Agboat (gagboat@trebnet.com) and Santina Kerslake, a business coach with Leapfrog Consulting (www.leapfrogconsulting.com) offer these thoughts. Please keep in mind that although these tips are general, there might be regional, legal or cultural differences in your locale.

  1. Think about the business first. If the business is doing great, then consider a long-term lease. With a long-term lease, you can negotiate better terms and prices. If you know that the office will do you for ten years and that your business will be around that long, then a long-term lease is good. Otherwise, a short-term lease is preferable.

  2. Consider what is included in the lease. Unlike residential leases, business leases cover other expenses such as taxes, common area fees, garbage collection and so on. It can become confusing because some leases have one price that covers everything, or a realtor might quote a price based on square foot per annum. This can make comparisons a little complicated, so ask a lot of questions before signing on the dotted line.

  3. Before signing a long-term lease, consider whether the existing office space will meet your needs for the next ten years or so. Are you planning to expand and will this require new space yet again? If this is a possibility, be sure your lease has a clause that will allow you to sub-lease. Otherwise, you will be responsible for paying the rent on the space even if business growth forces you to move out.

  4. Before signing a long-term lease, consider what the neighborhood might be like in ten years. You don't want to be locked into a lease if the neighborhood is deteriorating and might become an embarrassment to you later on.

    Is signage included in the lease? What is the process for getting signage approval and what is the cost? Try to get signage costs included in the lease if possible.

  5. at a certain time. If your lease stipulates your hours of access, you'll have a leg to stand on if the owners change their minds about lockup time later on.

  6. Are parking and security included?

  7. Make sure your Offer to Lease and your actual Lease are compatible. Check carefully before signing to ensure that things agreed to in the Offer to Lease are restated in the Lease.

  8. Be cautious of agreeing to a Personal Guarantee. They can be risky.

  9. If the lease lists "additional" expenses, find out exactly what this means.

  10. And finally, have your lease checked by an office lease lawyer before signing.

These tips are the basics. There could be much more depending on the property, the Lessor's and the Lessee's needs.

June Campbell is a professional writer whose work has appeared in several international print and online publications. As the owner of her own business, Nightcats Multimedia Productions, she provides business writing services and online sales of business templates and guides from her web site. Her web site offers a number of resources to small businesses - including guides for proposal writing, business plan development and more. Visit June's Website to Claim Your FREE GIFT!