Renting office space is a serious commitment. Sign the lease, and you’ll be locked in to a legally binding contract, typically for several years.
To ensure you make a fully informed business decision, ask the key questions we’ve listed before signing the dotted line.
1. Is the space suitable?
Your offices are the ‘storefront’ of your company, and your employees’ home away from home. You want it to make the right statement, and be comfortable at the same time.
Modern preferences tend towards open-plan layouts, with cosy little niches for informal meetings. Ideally, you want office space that is airy, spacious and filled with natural light.
2. Is the location secure and accessible?
Location is everything. Your offices must be easily accessible for both employees and clients. Find out where the nearest public transport nodes are, and whether there is sufficient parking, either onsite or close by.
Is crime and grime a problem? What is the security like? Is there sufficient lighting outside the building, for if you or your employees work until after dark?
3. Is there room to expand?
A typical commercial lease period ranges from three to 10 years. You’ll obviously want to grow your business over that time, and have sufficient space in which to do so.
The problem is, smaller companies and startups often don’t have the funds to pay for a lot of unused office space. This is why the next two questions are crucial.
4. Is there an option to sublet?
Find out whether you’re allowed to sublet excess space. This could enable you to cater for future expansion while generating income you can use to cover a portion of the monthly rent.
Subletting to a complementary business might also present mutually beneficial business opportunities.
5. Is there an escape clause?
Ascertain whether you can get out of the lease if necessary, in case your business either folds or outgrows the existing space before the lease expires. If you can’t negotiate an escape clause, try and get first option on adjoining space in the building, to allow for potential expansion.
6. What are the terms of the lease?
Be absolutely clear about the terms and conditions of the lease. For example, what deposit is payable upfront? Also, what exactly does the rental cover? For instance, does it include electricity, water, rates and taxes?
Is the lease subject to rent escalations, and if so, by how much? On average, office rental rates increase by 8% year-on-year.
7. What are the implications of breaking the lease?
Clarify exactly what penalties may be imposed if you break the lease. Do you lose your security deposit, are you denied access to the premises and could the landlord or property management company sue you?
8. What amenities and services are included?
Landlords often offer extra amenities and services as incentives for you to sign a lease. They may agree to refurbish the office space to your specifications, deduct your office relocation costs from the rental or provide underground parking for directors or managers.
Be sure to be a tough negotiator, especially if the office space appears to have been vacant for a prolonged period.
9. Is there onsite management?
Determine whether there’s a caretaker or office manager onsite to deal with maintenance and repairs. If there isn’t, find out who is responsible for responding to maintenance emergencies.
10. Who pays for repairs and maintenance?
Identify exactly who’s responsible for paying for repairs and maintenance, and insert a clause to that effect into the lease agreement.
In the residential rental market, it’s usually the landlord who covers the costs of repairs. However, there’s no standard commercial lease in South Africa, so it’s up to you to negotiate on this point.
11. Who were the previous tenants?
Find out who the previous tenants were, and why they left. If possible, get their contact details, and chat to them about the pros and cons of the building, the area and the landlord or property management company.
12. What about shared office space?
Before making a decision, consider all the alternatives. For example, it might prove cheaper and more convenient for your business to make use of a shared office, co-working space or a home office.
At K-Mark, we offer expert office relocation services and on-going office facilities management for businesses. We also manufacture high-quality office chairs to customers’ specifications. Contact us for more information or to discuss your needs.