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The Ultimate Guide to Office Fit Out – Step 8 Negotiating your office lease
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The Ultimate Guide to Office Fit Out – Step 8 Negotiating your office lease

Leasing an office space is a big step and can take up a significant amount of your budget. Take the time to negotiate your office lease before you sign a contract.

When it comes to renting space for your business you are unlikely to be able to achieve a change in the advertised price. This is because reducing the cost of leasing the building will be interpreted as a reduction in the value of the landlord’s asset.

Instead of trying to negotiate your office lease for a lower cost, you can instead discuss incentives with the building owner. Even in a landlord’s market, there are factors you can leverage when negotiating your office lease. This may not affect the monthly leasing fee but will help you reduce the overall expenses.

Here are a few tips to help you can negotiate your office lease:

Request rent free periods

When there is a glut of vacant properties, you may be able to negotiate six months, twelve months or even a longer rent free period. This allows the owner to keep the monthly rent steady but will reduce the average you pay over the duration of your tenancy.

Offer a longer tenancy period

To be the successful applicant or to be able to increase rental incentives, try to negotiate for a longer lease . (So long as you are confident you will be able to cover the costs on an ongoing basis).

Discuss improvements and repairs

During negotiations (and before you sign), you should be able to come to an agreement regarding tenant improvement allowances and building repairs. Allowing you request certain upgrades and changes at the expense of the landlord if they are willing to do so.

Go into this part of your negotiation fully informed. Have an understanding of how much improvements or repairs will cost and how they may benefit the landlord.

Agree on exit terms

Before you sign an office lease, make sure you negotiate the exit terms.

This includes the ‘make good’ clause, which covers the cost of returning the space to its original state when you leave. In some cases you can negotiate to absorb this cost over the term of your lease. Saving you from ending up with a huge bill when your tenancy comes to an end.  Depending on the situation you may be able to write the make good clause out all together.  Read the office lease carefully if you are moving into an office that is already fitted out, check the lease to see if you are required to strip it out when you leave.

How to negotiate a commercial lease

The process of negotiating a commercial lease should involve legal, financial and architectural representatives as well as the business owner. Together you will be able to review the details and confirm the suitability of the space before signing any contracts.

Ensure you have good advice and that you consider elements including square footage, the potential for expansions, and the option for extra space. Your lease should also describe in detail the exact responsibilities of both the landlord and tenant.

Office lease negotiations can take time so allow for this as soon as you make the decision to move. Rushing into a new lease agreement puts you in a poor bargaining position.

Throughout the negotiation process, the most important thing is to stay calm! If you can’t reach an agreement you are completely happy with you always have the option to walk away.  Just like any negotiation all parties should be satisfied with the out come.  Remember you both have to live with each other for the foreseeable future.

Stay tuned for The Ultimate Guide to Office Fit Out Step 9, Finalising your office design.

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