Office Space

Commercial Office Space: When To Start Negotiating Your Renewal

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Office Space

Very few commercial tenants will start off their initial search for an office space lease already thinking about when and how they will renew the property once their lease term expires. However, this renewal option is extremely important as it safeguards the tenant, especially if they are comfortable in their office space and don’t want to have to move out once their lease term expires. As a commercial office tenant, you want to know about renewal options in the very beginning, even before you sign an initial lease. The following will highlight the important factors which one should know about the renewal option of a commercial office building lease.

What Does A Commercial Office Lease Renewal Option Do?

A renewal option in a commercial office lease is a clause which details whether the tenant is able to renew the current lease and what terms apply to such a renewal of the lease. The renewal clause will dictate when the renewal option must take place and what the tenant must do to put such a renewal of the lease in effect. In addition, the renewal option clause will list all of the other fine details to renewing one’s lease, all of which the tenant must follow in order to properly initiate the renewal option of the commercial office space lease.

When Do You Need To Start Negotiating The Terms Of The Renewal Option?

Although the renewal option will not be put into force until a certain time as stated in the initial lease, it is imperative that the office space tenant have such a clause put into the initial lease prior to signing it. This way there is no doubt as to the issues involving renewal of the initial lease and accompanying lease terms. When the lease is being drafted is when the tenant and landlord should discuss the terms involving lease renewal and renewal options.

What Should The Renewal Option Clause Include To Protect You As The Commercial Tenant?

In order to be properly protected as an office space tenant, the renewal option in the initial lease should include a few distinct features. This clause should state the time in which a tenant must give notice in order to properly renew their lease, the lease renewal length and the rate of the commercial rental. By having all of these factors in writing, the office space tenant can rest easy knowing that should they choose to do so, they will be able to renew their current commercial office space lease when the time comes.

The presence of the renewal option in a commercial office lease is extremely important. It protects the commercial office space client from having to move out when their lease term expires if they don’t want to and provides them with peace of mind knowing that they will be able to continue working in their current location for a specified period of time beyond the initial term of the lease. Therefore, having this renewal option and negotiating the terms of it prior to signing the primary lease is a must.

Leasing Office Space: Understanding the Common Area Factor

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When business owners find office space to rent, they may run into a difficult time understanding the common area factor and how it pertains to rentable vs. usable square feet. This can be confusing at first but once you get a handle on how these two measuring qualities relate and dictate the results, you will find that renting the right size office space to be an easily achievable goal.

What Is The Common Area Factor?

Many people have heard of the common area in a commercial building. It is the area of the commercial space which is shared with other commercial tenants in the office building. There are two common area factors, the floor common area factor and the building common area factor. The floor common area factor refers to the single floor only where the business tenant leases commercial office space while the building common area factor relates to those common areas which all tenants in the commercial office building have access to and are able to use. The total common area factor which you are given by the office space landlord for information prior to leasing the office space is the sum of both of these common areas.

Understanding Rentable Vs. Usable Square Feet

It is important to understand the difference between rentable and usable square feet prior to renting office space. Rentable square feet is the amount of square footage which you pay rent for. This includes all areas of the interior building space which you pay for such as the office area, restroom, closets, etc. Your commercial office space rent will be the rentable square footage multiplied by the square footage lease rate.

As for usable square feet, this calculation relates to the amount of space you put to use. This will also include the doors and structural walls as well. If you share restrooms with other tenants, you will have to pay a portion of the price for those facilities in addition to any other common areas.

Ensuring That Your Square Footage Calculations Are Accurate

The aspects of common area factor, rentable square feet and usable square feet can be a bit confusing, even when provided with the general overview of such concepts. The best way to ensure that you have a good grasp on these concepts and that you know exactly what you are renting and what you are ultimately paying for, having a tenant representative by your side is essential.

The tenant representative will explain these factors in great detail for you and help you to negotiate with your landlord to ensure that you are getting exactly what you are paying for. These concepts can be even trickier if you lease more than one floor of an office building and need to know what you are paying for and whether or not your commercial office space budget will allow for such rentals.

Many get the hang of the common area factor, usable square footage and rental square footage after leasing office space a few times. However, having a tenant representative along to help will definitely make the leasing process much simpler for most office space tenants.

Leasing Medical Office Space And The Finer Points

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The business owner who leases medical office space has quite a bit more to think about when leasing this type of an office building over all others. Since the medical profession is unique in the office setting it needs and the work which is performed there, there are certain finer points which an individual must consider prior to leasing medical office space.

Medical Use Issues

Certain issues relating to usage of the leased office space will come into play, especially in the case of medical use. There will often be requirements relating to the disposal of hazardous waste materials, the proper office usages and how many individuals will be allowed in the office space at one time. The presence of different pieces of medical equipment may also have to be discussed so that the landlord is agreeable to the medical office space use and what services may be offered in the leased premises.

Americans with Disabilities Act (ADA) Issues

Since you will be operating a medical facility, you should make sure that your leased office premises meets the Americans with Disabilities Act (ADA) requirements and are accessible for patients and other individuals who visit your facility. This ADA issue should be addressed in the lease and it is quite important so be sure to pay close attention to this factor before you sign a lease for medical office space.

Exclusivity Provisions in the Lease

Many medical professionals like to be the only medical provider in the office building or commercial building. Therefore, it is a good idea to make sure there is an exclusivity provision in the lease which states that there will only be one medical office within the development or office building. This outlines the request of the office tenant and makes sure that there won’t be competition for the office tenant down the road with the landlord leasing out other office space in the building to another medical professional.

Clause in the Lease Which Pertains To Death and/or Disability of the Office Tenant

In the case of solo medical practitioners, some may wonder what would happen to their lease should there be death or disability during their lease term. A death and disability clause within the office space lease will help to ensure that the lease can be canceled or will expire upon such an occurrence and there will no longer be any requirement to pay rent on the lease. This may take some persistence on the part of the office space tenant but one should attempt to have such a clause included within the lease if at all possible.

Renting medical office space may take a different route than renting regular business office space. A tenant advisor can help with the process to make it go more smoothly. The office space tenant who is a medical practitioner must do everything possible to ensure that the office space which they lease is suitable for their medical practice needs and that the lease contains all of the necessary provisions which will benefit them and protect them in the long run.

Office Lease Options: The Best Time To Exercise

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In commercial leases, there are many clauses for tenants to pay mindful attention to, in addition to reading the entire lease carefully, of course. However, the Lease Option clause is an extremely important one to be on the lookout for prior to signing a commercial office space lease. This is the clause which will tell you when, and if, you will be able to renew your lease when the time comes to do so. Even if you have no current plans to renew your commercial lease or are unsure as to whether you plan to stay in the location once your lease expires, it is always wise to ask for one of these clauses to be put into the lease, if it isn’t already.

Why Is A Lease Option Important?

There are a few reasons why tenants who lease office space should be sure to have a lease option included in their commercial lease. First, this type of option to renew provides the tenant with a future plan should they decide to stay in their office space and renew the lease for another term. It guarantees that you won’t have to pick up and move if you are not ready to when your current lease expires. Secondly, an option to renew in the lease will lay out the details of the cost of your rent when you renew and help you to be certain that the price at which you renew is acceptable to you. It provides you with a way to lock your current lease rent amount into place for the future. Lastly, with the cost it takes to relocate a business, you want to know that you won’t have to if you don’t want to. You can feel confident in knowing that you won’t have the expenses of relocation down the road.

When Is The Best Time To Exercise The Lease Option?

The best time to exercise a lease option to renew will depend on the language in your current lease (or the lease you are about to sign if this is your first time entering into a lease with the new landlord). The Lease Option clause will highlight when you must exercise your lease option in order for it to be valid. This will often depend on the state you are in and what the normal notice is for commercial tenants who wish to exercise their lease option with their landlords. Always pay close attention to the time period stated within the lease because if you fail to exercise your option to renew on time, your landlord basically doesn’t have to let you stay in the premises unless they want to overlook the delay in exercising the lease option and allow you to stay anyway.

Having a lease option in your commercial office space lease is simply a smart idea overall. Just because such a clause is included in the commercial office space lease does not lock you in to renewing your lease when the time comes. If you choose to move to a different location at the expiration of your current lease and not exercise the option to renew, you are free to do so. It is just a good idea to have such a clause in place should you wish to maintain your business at its current location for another lease term.

Understanding The Cost Of An Office Space Build-Out

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When searching for a commercial building or office space to lease, you may not find exactly what you had in mind when you started off. With that said, there are ways to take commercial office buildings and turn them into what you had envisioned in the first place, with the landlord’s permission, of course. This can occur in the form of an office build-out. An office build-out entails taking a current commercial establishment and tailoring it to suit the needs of your company. The following will help you to understand more about the office build-out and calculate how much such an adjustment will cost.

Why Office Tenants Need an Office Build-Out

One might think that when you lease an office space that you take the office space as is and are not able to alter the space in any way. This is often not the case. Many commercial tenants lease office space on the condition that certain alterations are made to the premises prior to or while they are leasing the space. These tenants often need something known as a build-out, where the office space is expanded upon and altered to suit their needs. This may be so that it can suit their specific industry needs or because it simply needs to be larger or sectioned differently.

How Much an Office Build-Out Costs

An office build-out will vary in cost but there are general estimates which are common with today’s commercial office space construction. For example, if you are interested in leasing office space and need a partial build-out for something such as paint and carpet, the current rate for both of these updates is approximately $8.00/sf. On the other hand, if you require a full build-out, the price per square foot will be in the general vicinity of $30-$40/sf.

Who Pays For the Office Build-Out?

Many times the landlord will pay for the build-out costs. This is especially the case when the lease term is for three years or more. For those instances when the landlord will allow the build-out to occur but refuses to pay for the costs, the tenant may pay for the costs on their own or ask that the rent rate be reduced for a certain amount. These build-out costs and requests for such alterations are often done during the negotiation stages of the office space lease process. One way to ensure that your bargaining power is the best that it can be is to have a tenant representative alongside of you when you meet with your landlord to discuss the build-out options available to you and see if the landlord will contribute to these endeavors.

An office build-out provides commercial office space tenants with a beneficial way to get the office space they want with the amenities and space they desire. Many landlords in the commercial arena are open to build-out negotiations and know that it is a good way to draw tenants in and have them lease their premises as opposed to going elsewhere. If you are looking to acquire an office space lease with build-out potential, bring along a tenant representative to ensure that the negotiations go as well as they should.