Looking for office space? Good luck. In most markets, vacancies are down and rents are up. Make sure you're getting the best deal by asking the right questions.
By Jennifer Gill | Jun 1, 2006
What's my base year? If you sign a full-service lease, the landlord factors your portion of the building's annual operating expenses--utilities, janitorial services, maintenance--into the rent. After your first, or base, year, he's entitled to "pass through" any increases incurred in operating the building. That may come in the form of higher monthly rent or in a bill at the end of the year. If your lease starts between August and December, push the base year out to the following year so you're guaranteed no pass-throughs for more than 12 months. If you move in before August, the base year will probably be the current calendar year. In that case, negotiate a full year free of pass-throughs.
Can we move to one of your other buildings if we outgrow this space? Many landlords collect properties as though they're playing Monopoly. See if yours will let you rip up your lease without repercussions and move into bigger digs in another property. This is key for tenants occupying, say, 3,000 square feet or less, because a landlord is unlikely to give them expansion rights in their current space.
What if I can't move out when my lease expires? A standard lease will make you pay dearly, as much as 200 percent of your current rent, for every extra month you stay. When signing a lease, negotiate the holdover rent down to 150 percent, even 125 percent.
What if my space isn't ready by my move-in date? While big tenants usually build their new space themselves, small companies often let the landlord handle renovations and negotiate a move-in date when they'll begin paying rent. Add a clause in the lease that says you have the right to terminate the lease if the space isn't ready on time. If your landlord balks, give him an extra month to finish the work if he'll pay your holdover rent at your old place and any damages that arise. Agree to pay rent only when you take occupancy, no sooner.
What time does the AC shut off? Nothing's worse than working overtime on a hot summer night with no air conditioning. Ask how much after-hours AC costs. Landlords usually bill for two-hour periods. Besides your own space, you also may have to pay to cool the offices one floor above or below you because of how the AC system is zoned. If that other tenant also works late or on weekends, make sure the landlord isn't double-billing.
Do you charge for parking? Don't assume those spaces out front are yours. Some landlords will try to slip a clause into the lease that says parking fees are subject to change. Negotiate a fixed price and lock it in.
The space I'm renting is mine for the term of the lease, right? Many leases say that the landlord can relocate you elsewhere in the building if, say, a bigger tenant moves in next door and wants to annex your panoramic views. But there are ways to protect yourself. Demand that you can't be booted to a lower floor, that you get the same off-elevator exposure, and that the landlord cover your costs.