A significant step towards starting your business is renting office space. You give potential clients a tangible location to visit by having office space. As you start looking around and studying how to lease office space, you must know what you are looking for in a suitable workspace.
How To Lease Office Space
The lessor and the lessee of office space must perform the necessary diligence to ensure security under the agreement. There are critical actions for both parties to take to achieve the intended result of locating the ideal location or tenant. Check out the next few tips to be ready when renting an office, whether you’re the landlord or the renter.
Step 1: Assessing The Area and Listing Essential Office Features
A commercial office unit’s owner or present tenant’s first concern should be to ascertain the exact location of the space. Before looking for a potential tenant, it is critical to determine the actual square footage and the facilities and costs the lease will cover. If subletting is the intention, make sure it is allowed under the current contract terms before continuing.
Determine the rent per square foot for the apartment. Think about which utilities to provide and which to charge the tenant for. It will be easier to identify the nature of the lease agreement to be mentioned when conducting a tenant search. This is because the lease terms are decided in advance.
It is recommended to prepare a vision of the ideal place from the tenant’s viewpoint. Before starting your search for potential properties, narrow down the following criteria:
- Budget for rental payments.
- The size that you’d want.
- Lease Term.
- Office Space Type (Class A, B, or C).
- Qualities that are desired in a space.
- Regional area.
Remember to factor in the needs of your staff and clients while considering the requirements for a rental unit. It may address the demands of everyone using the space if these factors are considered during the decision-making process, which will result in a more efficient working environment.
Co-Working Area
Depending on their circumstances, renters may commit to working in a shared office setting as an alternative to long-term office leasing. The benefit of co-working space is that You can modify the commitment to pay rent to a temporary obligation. Some businesses also permit members to use spaces at various locations as the affiliate needs.
Step 2: Finding Listed Office Space Or Marketing The Commercial Office Unit
A listing for a public advertisement can be created after the variables connected to the topic of commercial office space for rent have been defined. To include in the posted listing, it is customary to prepare the following specifications:
- Square feet of space.
- The rent is charged (Typically in Dollars per Square Foot).
- Minimum Term of Lease.
- Creating class and utility.
Step 3: Viewing The Property and Giving A Showing
To receive a property inspection request, landlords must respond to inquiries promptly. When a prospective tenant expresses interest in a property, You can schedule a meeting to show off the office unit. Highlight any unique amenities the space offers, and be ready to respond to any inquiries from a potential renter.
Those who intend to hire an office should record the advantages and disadvantages of each building space they tour. To validate the actual pricing per square foot, ask questions to determine the included and excluded expenditures. Pay attention to any positive or negative aspects of the property. Do you know if the building is safe? Is it simple to get to? Which nearby businesses are renting space in the building?
To reduce the options, break down the decision elements to eliminate unsuitable units. The parties might start negotiating after deciding on the most suitable option.
Read More: Healthcare Real Estate Terms and Definitions
Step 4: Negotiate A Lease With Terms That are Agreeable To Both Parties
From the tenant’s perspective, it can be advantageous to narrow the field to two or three excellent properties with various owners. This will enable you to compete for a tenant. In addition, this will give you some leverage. Such a strategy can result in financial incentives or motivational provisions. Knowing the four main types of leases and their respective purposes will help you determine which one is appropriate for the transaction.
The four types of lease are:
- Gross Lease – The Landlord is liable for all common area upkeep costs, property taxes, and insurance (CAM charges).
- Modified Gross Lease – Landlord/Tenant Responsibilities under a modified gross lease are to be specified and defined in each case by the contract.
- Triple Net Lease (NNN) – The landlord is liable for the costs of keeping the building and grounds in a reasonable state. Property insurance, real estate taxes, utilities, and other costs connected with maintaining the common areas are the tenant’s responsibility (CAMs).
- Coworking Lease – All utilities, services, common area maintenance (CAMs), taxes, and insurance are the landlord’s responsibility. No additional costs beyond the agreed-upon rental fee are the tenant’s responsibility.
The contract’s terms can be organized once both the lessee and the lessor are prepared to commit. A significant stage in the rental process is setting up a face-to-face meeting or phone conversation to discuss the details of the upcoming lease. All possibilities for an agreement are considered, and the landlord is designated to draft the contract by the terms outlined in the agreement.
Related: Dental Office Space: Leasing vs Buying
Step 5: Verifying The Tenants’ Credentials
After determining the agreement’s specifics, the landlord will provide the prospective renter with a Rental Application to complete and return. The paperwork will provide insight into the applicant’s qualifications. The lessee will be required to submit supporting documents with the application to verify the business’s or person’s ability to pay. Before signing an agreement, you may require extra background checks for persons personally applying for a lease.
Step 6: Signing The Agreement and Acquiring Tenancy
The leasing agreement can be produced for examination after passing the necessary background investigation. The contract can only be endorsed once both the lessee and the lessor are happy with its contents. Once the tenant and landlord have signed and dated the contract, a legally binding obligation is established. After that, the renter will be obligated to pay the rent by the terms of the agreement. This kind of transaction is often made in the presence of a certified notary public to ensure validity.
Once signatures have been witnessed, keys are often released for the mailbox, particular areas, and common spaces. The office unit’s tenant(s) are either handed or sent the keys immediately after that. After signing, the lessee may occupy the unit space at the time and date specified in the lease agreement.
