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4 Common Office Leasing Mistakes (and How to Avoid Them)

Signing a commercial lease can be a huge step in the life of your business. While it’s usually a positive step, reflecting growth and optimism, it’s also one that should be undertaken with your eyes wide open and plenty of due diligence.

Finding an ideal office space can be very time-consuming, and it can be tempting to want to get through the paperwork as quickly as possible after a successful search, but this is a big mistake. Commercial leases are very complex, and variations in clauses and terms can have a huge impact on your bottom line. 

Any commercial agreement has pitfalls – these are the ones we tend to see most often:

Mistake #1: Neglect of “out” clauses

It may not seem like a priority when you’re focused on securing a location and getting moved in, but failing to build reasonable exit options into the lease is a common mistake that can be costly. You can’t predict the future, so while you may be happy and productive in the new space for years to come, don’t fail to consider the possibility that you may need to get out of a lease, which can be tricky. In fact, even the most promising of “Unicorn” companies have fallen victim to missed growth projections and changes in staff size.

Some protection is offered by adding options to sublease the space or assign it to a new owner should you sell the business. Sometimes it’s possible to negotiate a shorter-term lease, with the option to renew at a given point. Other “out” clauses have to do with guaranteeing payment of rent in the event of bankruptcy or other circumstances. These should all be ironed out.

Mistake #2: Becoming attached and committed to any one property

Never subscribe to the idea that the property in question is the only one that will suit you and make your business a success. Enter the negotiations with a more detached mindset; know that if you don’t get a fair deal that meets your requirements, you can move on and find something that does and also provides the environment your company needs to thrive.

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Mistake #3: Being unaware of proportional concessions

Commercial landlords prefer leases with terms of 5-10 years or longer. If you’re making that kind of commitment to the property, you can ask for some concessions that the landlord must provide in exchange. Common concessions include free rent for a period of time or build-out of the space at the landlord’s expense. Being unaware of this puts you at a huge disadvantage.

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Mistake #4: Negotiating in panic mode

It may be that moving to a new space was not part of the plan. Sometimes circumstances force us to move in response to adversities or hurdles. For example, your existing landlord may want to sell the building. Or maybe (and this is not a bad thing) your business has grown more rapidly than you anticipated and you absolutely need more space immediately.

These circumstances can lead some to make hasty decisions when they feel like their choices are limited. This is another case in which listening to experienced professionals can save your bacon. There are always alternatives. Don’t give in to desperation and make a deal you’ll regret. Keep a level head and don’t compromise on your absolute must-haves.

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