7 Pitfalls of a Traditional Office Lease

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A traditional office lease may be the best fit for your business if you have many employees or require a large footprint. But, in some cases, such as a start up business, home based business, small business, or growing business, the constraints of a traditional office lease do not meet their dynamic needs. Some points to consider with a traditional office lease are:

Personal guarantee or “Credit Worthiness”

Most landlords will require a personal guarantee (meaning if something happens you are personally responsible for the lease even if it is in your company’s name) and require you to provide business or personal financials for review.

Long Term

Typically the traditional commercial lease requires a 3-5 year, or longer, initial term. With a soft market you may find a shorter term available but usually no less than one year. These long terms lock you into a space and, should your needs change, you are typically stuck until the end of your lease. (Ask about the option to sublease).

Long renewal periods

Traditional leases usually have long renewal periods of 3-5-10 years. Again, this limits your options should your needs change.

Utilities

Included or not? Ask if you are responsible for utilities and cleaning services.

CAM charges– (Common Area Maintenance)

Included utilities do not necessarily mean you are off the hook. If the landlord goes over budget on expenses, you are responsible to pay for your % share of the overage. This could be an unexpected bill of $100’s or even $1,000’s when you least expect it.

Property Tax

Ask if you are responsible for your % share of the property tax for the building. This may be a passed through expense.

Usable vs rentable square footage

There is a difference. Usable square footage is the actual size of the space you are occupying, if measured wall to wall. Rentable square footage is the usable square footage multiplied by your percentage share of the common areas (bathrooms, hallways, elevators). So, you are helping to pay for areas that are not exclusively yours and you may not be getting the amount of space you think.

If the above terms are not agreeable to you or your business needs, there is an alternative. Our executive suites and office business centers provide upfront and flexible terms that help a business to grow and flourish at its own pace. Check out our next segment to discover the benefits of our alternative office solution.