Amongst the decisions that need to be made when leasing office space, the length of the lease term is one of the more important. Some of the things which need to be considered are:

  • How important is the location, the image, and the visibility?
  • How predictible is the company’s future growth.
  • What are the market conditions and will a longer term allow you to take advantage of favorable market conditions?
  • Will there be a significant amount of tenant improvements invested in the space?

While lease terms are not standard, they do vary depending on product and market conditions. When the market is soft and a lot of space is available, landlords are more accomodating to shorter terms; they want to do what they can to get their buildings filled, but they often times do not want to commit to long term leases at historically low rates.

Nevertheless, it is important to consider your company’s specific needs as opposed to those of the landlord. If your company has significant money invested in office improvements (law firms, private finance, etc.), lab space (biotech, medical), clean rooms (semiconductor, medical device, etc.), and/or data center space, then a longer term lease will likely be the preferred scenario. It not only allows the company to predict their occupancy but a longer term leases generally increases the amount of tenant improvement dollars a landlord might contribute to the deal.

As a tenant it is important that all these questions be answered so as to try and prevent any costly leasing mistakes.

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