Not that many people go for a long term lease when they rent a place. There are many reasons for this, and one is due to the need for flexibility and another is to keep their options open. While a short term lease does give you a little wiggle room, particularly when you are unsure of the area, there are many more reasons why you should actually opt for a long term lease.
Short term leases are preferred by many, particularly new businesses, because of the freedom it gives them when expansion or even closure occurs. It also gives them the liberty to move to other offices that may be cheaper or in a more favorable neighborhood when their initial lease is up. What they may not realize is that, there are actually more benefits to longer office leases than short term ones.
Benefits of a Long Term Office Lease
Signing a long-term lease for your office is kind-of like buying in bulk. You get to ask for a few concessions in exchange for what you are getting into. As with bulk buying, long term office leases can come with discounts, if you ask for it. It can also come with special terms, like one month free every year or more parking spaces.
Another benefit you can get from a long term lease is rent increase protection. Unless stipulated in your lease agreement, you can pay the same rent that you have been paying for the past few years, even if the value of the property has increased. This is a good deal to have, particularly if your office space is in an area that suddenly experiences a real estate boom. Think in terms of Silicon Valley and how prices there skyrocketed when tech companies suddenly called it home. And even if your contract stipulates incremental increases in the rent over time, it would still be smaller than if you had to renew every couple of years or so.
Also worth nothing is that when you sign a long term office lease, you are setting down roots. People will know where to find your offices and won’t have to try look for you if you had to move due to a short term lease agreement that cannot be renewed. This gives your company stability, not only in terms of not having to move every so often, but also in terms of making yourself easy to find and being easy to access by your clientele.
What to Negotiate Before Signing a Long Term Office Lease
Since you are basically giving your landlord guaranteed income from your rent for at least 5 to 10 years, you can negotiate a few perks with this. Aside from asking that rent stay the same for the whole duration of your stay, you can also negotiate for other concessions, such as tenant improvements and free rent every other year. You can even negotiate to have the right to sublease your space if you feel the need to, and this clause can be added to your contract.
A longer lease will give you more room to negotiate terms that you feel will benefit you and your business. You need to get these concessions agreed upon before you close the deal since you won’t have this upper hand for too long. Once the contracts are signed, any stipulations that you want added into your lease at the last minute won’t be that easy to swing since you already have a signed lease agreement.