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Business

Factors to Consider When Renting an Office Space

3 Mins read

Small companies undergo great expenses in renting office spaces. They have hidden costs and restrictions that can be very expensive for people who do not understand how they work. Most of the office spaces are leased in years terms mostly about five to ten years terms. Clients negotiating leases for office space give the landlord an advantage over them. Fort Worth office space for rent allows the landlords to write long term or short time plans while trying to maximize their assets final returns. Some businesses choose to seek legal advice from lawyers to protect their interests. Legal involvement may be a bad or good business idea. For some business’s preservation of certain rights during the period of lease helps them to turn the opportunity into great assets. However, the most protected between the two are landlords since buildings are very valuable assets.

Office spaces are priced per square foot and to tenants, yet the tenants may end up being charged higher than expected because some of the spaces are unusable. Tenants may be using only 75% of the 90% space they are paying for. This rentable space loss depends on the landlord’s way of measuring the rented space, the physical layout of the office space, and the landlord’s unpredictability. The calculated rental space includes the staircase, lobbies, elevators, and janitors’ closets. The layout of the building utilities also contributes to the loss factor. For example, buildings with elevators at the centre instead of at the edge, fancy curves, a lot of columns increase the rental space charges greatly.

There is no standard method of measuring office space for rent. Landlords sometimes take measurements for example from one exterior wall to another exterior wall. It is however allowed that a tenant hires an architect who can help with the exact measurements of the office to avoid being overcharged hence a loss. Architects use standard allowed measurements and can advise the business if the measured space will be useful. At the end of every lease, the tenant is expected to pay for the rented space and sign a new contract with the landlord for the lease of the office space again. Some landlords measure the space again and claim that it is larger due to a lack of measurement spaces.

Operation expense is other expenses that are paid due to normal pocket costs when running a building. Tenants should benefit from this since it is the only thing they gain from the lease agreement. Expenses that the client is charged should correspond to the benefits they get and should meet the standard objectives and not just agreements specific to the landlord. Some premises owners use this as a profit gain. The tenant should be keen and insist on following precise and limited definitions of included items. Otherwise, the business owner is likely to be charged expenses that they do not use in running their business operation within the building.

There are specific items that are always excluded from the expense charges to a rental office. Examples of particular items excluded include electricity in tenant spaces, consultation fees, landscaping costs, penalties due to failure to pay taxes on time, commissions and advertisement costs, executive salaries, structural repairs and replacements, the fee paid on defaulting the lease agreement, legal fees in case of disagreements between the landlord and the tenant and any overpayment to a contractor by the landlord due to their relationship. During lease negotiation, capital expenditures should be taken seriously. They should be excluded from the operating expenses since they involve capital improvements made by the landlord to their building but benefit the tenant. Capital improvements like new HVAC systems and more efficient elevators are part of capital expenses for the landlord and should reduce the tenant’s expenses bill. Landlords however sometimes insist that the tenant too should cover part of the costs.

Exclusions in the lease agreement sometimes are still included in the expenses bills if the client is not careful. Similarly, the landlord may be charged on capital expenditures that were included in the agreement.  The landlord however may convert capital expenditures to client’s expenses by charging them on rental equipment that is a capital equipment and is their responsibility. Charges like this can only be noticed by a keen tenant and they should always be up to date on any changes on tax laws and tax reforms that] give landlords opportunities to equipment leasing and not buying.

Tenants should take into consideration many aspects of the lease agreement. Many factors arise during the building operation and cases emerge that were not discussed during the lease contract. Sometimes it is better to involve different types of professionals such as lawyers and architects to make the process of making payments to the office space rentals favourable to both the tenant and the landlord. There have been cases where the tenants and the landlords disagree, and the court has to come in. Office space renting should therefore be done carefully and keenly.