Common question #1: How long of a lease should I sign?

 

One of the most common questions asked to us by a new tenant is, why should I commit for more than a 1 year office space lease if I don’t yet have a grasp on my companies growth?

 

An important consideration office tenants should keep in mind before we answer the above question is that to commercial landlords, minimizing the vacancy rate of their building is their primary goal. And a common scenario for landlords is moving tenants to larger or even smaller spaces when they require this. It makes sense for landlords since you are already prequalified, he saves on legal and brokerage fees since you have already reviewed and negotiated his lease, and he won’t lose any rent on the upcoming space. Obviously, he’ll also have less space available.

 

For this reason, we advise new tenants to consider leasing space from landlords who own multiple buildings. Establishing a personal relationship with a large landlord can be one of the most beneficial moves any entrepreneur or business can and should have. It is not unusual for tenants to start in a small space and move five or six times over a few years into a very large space in the same building.

Also, considering the current tenant advantageous market, don’t be turned off by long office leases, instead opt for one. Locking in a good price per sqft and not having to worry about a larger rent increase in a year or two should be something all tenants should consider. Besides, wouldn’t it be more disruptive and costly for your company to sign a series of one-year leases, spend the last few months of each year frantically looking for space, spend money and time moving, and lose time with rent overlapping? Why not pick out a building, location, and landlord and move around within their building without losing any rent overlaps, and negotiating any new leases.

It might make more sense to do the work once every 5 years and then focus on your actual job rather than trying to look for space every year. After all, your job is growing your company and not frantically look for space every few years or so.

 

by David Gomez - Fountain Realty Group

 

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