Now more than ever, leasing office space for your business is daunting as the country transitions out of the national lockdown. With remote working part and parcel of our daily experience, both small and large businesses are scrutinizing lease agreements and asking the important question: Are we getting value for money?
Attacq’s Head of Asset Management (Commercial), Debbie Theron shares her five most important points to think about before signing a commercial lease agreement:
Understanding the strategic value of the neighbourhood and community in which you lease is a critical factor in ensuring that you get value for your money. Businesses who are reliant on client walk-ins require business locations that offer a broad range of lifestyle and entertainment choices. In addition, convenience and secure parking should not be negotiable. Management should always choose a location which aligns with its own values in terms of providing employees and visitors with the best choices in terms of amenities such as shops, schools, gyms and excellent transport hubs which promotes work life balance and convenience.
- Who pays what in the agreement?
As a tenant, you should always ask about common area maintenance. What is common area? These are typically spaces shared by tenants in a building or a precinct that normally includes services such as security, landscaping, and cleaning amongst others. You need to understand what the common area services are and what your share of these costs would be once you have signed the lease agreement. These costs are typically called ‘operating costs’ and should be clearly defined to avoid confusion later. Most agreements hold tenants responsible for the internal maintenance of their exclusively leased premises.
- Cost of occupancy
This refers to the total monthly costs related to your tenancy. It would be wise to obtain an estimate from your prospective landlord upfront so that you can budget accordingly and not be surprised at a later stage. These costs include rental, parking charges, operating costs, all utility charges, levies and your proportionate share of the rates and taxes – usually all quoted excluding VAT.
It is also important to establish who your electricity supplier is as the rates charged can differ.
- Decking out your new offices
Depending on the salient terms of your lease (rental and lease period are considered), you may be offered a tenant installation allowance. This is an allowance provided by the landlord towards the fitout of your new space and it is used towards partitioning, carpets, painting etc. You need to ensure that you understand what is on offer and what it covers as the various landlords do have different criteria.
The important principle is that this allowance must be used to upgrade the premises you are about to move into, and it is not an allowance towards furniture and tenant specific installations such as a bespoke server room. Understand how long your fit out will take and plan accordingly and turnaround time will depend on the complexity of your design and the size of your premises.
- A vested landlord
It is important to have a landlord that is much committed to the partnership as you are. Look carefully at the common areas in the building or the precinct you are about to move into, establish the landscape and the rules of engagement with the landlord upfront and remember that the lease you sign with your landlord is the beginning of a long-term relationship.
When choosing the space for your business, there are numerous factors to consider but what is paramount is how your business strategy aligns with the location and the landlord. Choose a location that aligns to your business, employees, and your stakeholders’ needs.