Dec 04, 2017

5 Ways to Create a More Flexible Commercial Office Lease

By Don Catalano


5 Ways to Create More Flexible Commercial Office Lease.jpg
Flexibility is a friend to any business when it comes to commercial leases. Having more leeway in your lease can help you better manage your business now and in the future and can help to ensure that the space or building that you lease will continue to meet your needs over time. There are a number of ways that you can make a commercial lease more flexible, including:


1. Opting for a Shorter Term 

A short-term lease will give you the ability to reassess your needs within the next 1 to 3 years and determine how well your space is working for you. If it's not, you won't be locked into your current lease and forced to pay for unused square footage or to lease a second location. The downside of a short-term lease is that the rental rate may be higher, and the landlord may be less likely to make other concessions that can work in your favor.


2. Adding an Early Termination Clause 

As explained above, long-term leases are usually more cost effective and can increase your chances of negotiating for perks and concessions that are important to your business. If you decide to go the route of a long-term lease, adding an early termination clause can make the deal more flexible. These clauses make it possible for you to end your lease agreement in exchange for paying a preset fee. While taking advantage of the clause can be costly, it may make sense to do so if your business needs change dramatically.


3. Including a Renegotiation Time Frame 

Another way to keep a long-term lease flexible is to include a right to renegotiate clause in your lease. This language stipulates that you will be given the chance to renegotiate aspects of your lease like the rental rate at a certain point in time, such as halfway through the lease. While landlords may be willing to renegotiate even without the clause, having one guarantees you the opportunity.


4. Fighting for Subletting and Assignment Rights

Liberal subletting and assignment rights can be very beneficial if you find yourself not needing all of your available square footage or end up having to relocate before your lease is up. These clauses guarantee you the right to offer all or part of your space to another company.


5. Introducing Expansion and Contraction Options

Expansion and contraction clauses give you the ability to acquire more space or cut back on the amount of square footage at any time or during certain points in your lease. Contraction options allow you to give up a portion of your space and are often available to large companies renting multiple floors in a building. Expansion options give you the ability to lease more space in a building. They can include the right of first offer, which means the landlord must offer newly available space to you before advertising it to third parties, and the right of first refusal, which means that the landlord is obligated to offer you any deal they would give to a third-party tenant on a new space.


Keep in mind that getting a landlord to agree to more flexible terms will mean negotiating. Going into discussions with a tenant representative by your side can increase your chances of success, and enlisting the help of one won't cost your company a penny.


Here are a few other articles to check out:

Commercial Office Leasing 101

Top 5 Tips When Negotiating Your Lease

Creating Flexible Office Lease Structures


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Topics: Commercial Office Lease

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Don Catalano

Don Catalano