Leasing an office space is a big step and can take up a significant amount of your budget. In order to optimise value for money, you must take the time to negotiate your lease before you sign a contract and move in.
When it comes to renting space for your business, the truth is 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 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. This may not affect the monthly leasing fee but will help you reduce the overall expenses involved with occupying the space.
Here are a few ways you can negotiate the lease on your office space:
Request rent free periods
When there is a glut of vacant commercial 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
In order to be the successful applicant or to be able to increase rental incentives, you may be able 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. This will allow 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, with an understanding of how much improvements/repairs will cost and how they will benefit the landlord in the long term.
Agree on exit terms
Before you sign a 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 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 fine print, examine the numbers and confirm the suitability of the space before any contracts are signed.
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 landlord and tenant.
Remember that office space negotiations can take time so allow for this as soon as you make the decision to move. Having to rush an agreement puts you at risk of decisions you will regret.
Throughout the negotiation process, the important thing is to stay calm! You have come this far but 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 walk away satisfied with the out come. You get your space, and he gets his tenant for a fair rent. Remember you both have to live with each other for the foreseeable future.
Apex Executive Interiors is Sydney’s leading office fitout company. Contact us today to discuss your next move.