Even for the most well-established companies, it is never possible to predict the future with complete accuracy. Unforeseeable economic downturns can lead to financial burdens, and opportunities for growth may emerge unexpectedly. Rapidly developing technology can even impact companies, shifting priorities, making certain jobs redundant or allowing key business functions to be relocated. Because so much is unpredictable, flexibility is of the utmost importance for commercial leases. The following tips can help you get the most flexible office lease possible to future-proof your business.
1. Opt for Short-Term When Possible
Short term leases provide the most flexibility for companies. With a short-term lease, you won't be locked in one location for an extended period of time, and the likelihood of outgrowing your office before the lease is up sharply drops. For startups and offices that will be used for temporary projects, short-term leases are often the best choice. The downside to short-term leasing is that landlords are often less likely to provide reduced rental rates, offer large tenant improvement allowances and make other concessions. As a result, you will need to carefully balance your need for cost savings with your desire for flexibility when evaluating whether or not a short-term lease is right for your company.
2. Fight for Sublease and Assignment Rights
Sublease and assignment rights greatly increase the flexibility of commercial leases and are often included in one clause in the agreement. Both give you the ability to allow another tenant to occupy all or part of your office but the rights do have distinct differences. When you sublease, you remain the leaseholder and your subtenant will either pay you or the landlord each month until the lease expires. With assignment, you turn the lease over to a new tenant and have no further obligations to the landlord.
3. Incorporate More Flexible Clauses
Even long-term leases can become more flexible when you have the right clauses included in the agreement. An early termination clause gives you the ability to terminate your lease at a certain period of time in exchange for paying a fee. For retail, an anchor or co-tenant clause makes it possible to terminate your lease if the anchor space in a mall or shopping center remains vacant for a certain period of time. With a right of first refusal clause, your landlord will be required to offer you additional space in the building if it becomes available before advertising to the public. This helps to ensure that you have the option to expand in the future.
4. Use a Tenant Representative Broker
One of the simplest ways to ensure that you get the best lease possible is to use the services of a tenant rep broker. Tenant representative brokers can provide you with advice about what changes can be made to a lease to increase flexibility and protect your business interests. During negotiations, the tenant rep will act as your advocate, bettering the odds that the landlord will be willing to agree to a more flexible lease.
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