Lease negotiations can be an arduous process for small businesses leasing Overland Park office space for the first time. Here are a few tips to keep in mind as your business looks into leases:
Watch Out for Assignment Clauses
Be wary of an assignment clause in a lease that states that a change in more than 50% of the stock ownership of the company is prohibited without the approval of the landlord, because this could result in the accident termination of a good lease. If your company grows and gains more investors, you could inadvertently trigger this clause.
Try to Avoid Personal Lease Guarantees
Sometimes landlords want a personal guarantee from the founders of the business if the potential tenant is a corporation or other entity. If possible, avoid this clause, because it could put both your personal and business assets at risk.
Negotiate the Best Possible Lease Relocation Clause
A relocation clause allows the landlord to move a tenant to another space within the building or complex if a larger tenant needs the space. Your company probably will not be able to get this clause removed from the lease, but you could try to negotiate it as much in your favor as possible by requesting three contingencies. First, ask for the same rent, office structure, views, quality of furnishings, etc. in the new space. Second, make sure the clause says that the landlord is responsible for any moving or renovation costs associated with the relocation. Third, insist on at least a month’s notice for relocation.
Being aware of these little parts of leases can help your business avoid any lease surprises down the line.
If you want to find out more about executive suites in Kansas City, give one of our commercial real estate brokers a call at 913-685-4100!
If you have been put in charge of negotiating an office space lease in Overland Park for your small business, you may be a bit overwhelmed and wondering how to get a good deal for your business. Negotiating a good lease can be crucial in making sure that your company has enough money to finance future growth.
Often your negotiating abilities are dependent on how much leverage you have. You can figure this out by doing some research on the space—has it been vacant for a while? Are there other companies interested in the space? Knowing these factors can give you an edge in your negotiations. Here are a few other thoughts to consider as you begin your negotiations:
1. Term of your lease. Even if you aren’t sure how long you want to stay in the space, you might consider the relative advantages and disadvantages of longer or shorter leases. For instance, landlords are often more amenable to making concessions for longer-term leases, but if the demand for rental space decreases over time, you could be stuck paying an above-market rental price if you are locked into that longer lease. A safe bet might be negotiating a shorter-term lease (i.e. a year or two) with options to renew (i.e. four two-year renewal options), versus a ten-year lease.
2. Amount of space. If you are comparing a few different spaces, you will want to know the exact usable square footage for each space. This is different (less) than the rentable square footage, which includes common areas such as bathrooms, lobbies, elevators, and public corridors.
3. Permitted use of the rental space. Most leases have a section that discusses how you are permitted to use the leased space. Even if your intentions for the space are initially narrow, try to make this clause as broad as possible to account for the potential growth or change of your business.
If you think you are ready to begin the negotiations process, give one of Southcreek’s commercial realtors a call at 913-685-4100 to talk to us about available executive suites in Kansas City!
Did you know that one of the biggest expenses incurred by a growing company is their office space? Most executive suites in Kansas City have different leases, so learning how to negotiate a lease that will satisfy your business’s needs and save you some money might allow you to hire some more employees or undertake a new project. Here are some tips to keep in mind while negotiating:
1. Term of your lease. There are positives and negatives to choosing a long term lease. On the one hand, landlords often make concessions for longer-term leases, but it is also important to keep in mind how the needs of your company might change during the course of your lease so a shorter-term lease with renewal options could be a good middle path.
2. Permitted use of the space. A lease usually includes a section dealing with how the tenant may use the space. It is usually in you as a lessee’s best interests to make this clause broad, in case your business wants to diversify or sublease the space to other businesses.
3. Operating costs. Operating costs, HVAC, and common area maintenance are things that your landlord might be charging you separately for. If possible, try to negotiate a cap on this amount or a fixed fee.
4. Increases in rent. A long-term lease rarely comes with fixed rent. Landlords often charge annual increases in accordance with increases in the Consumer Price Index (CPI). If at possible, see if your landlord will postpone this increase until two years into your rent. You might also try capping the amount of each annual increase or negotiating a predetermined fixed amount.
If you would like to ask any questions about negotiating an office space lease in Overland Park through Southcreek, give us a call at 913-685-4100!
You have decided that your business is ready to relocate to new executive suites in Kansas City and you are ready to begin some research. What to consider? Here are a few factors to think about as you are looking for a new Kansas City office space for your business:
- Anticipating Growth. Do you think your business might grow dramatically in the near future? If so, looking into a short term lease or an option to rent additional space might be a good way to accommodate that potential growth.
- Common Area Expenses. In many leases you will be required to pay to maintain common areas of the building or floor, including expenses like repairs or garbage services. Make sure you know exactly what you are responsible for and how much you will be paying.
- Type of Rent. There are several different types of rent, some fixed, some dependant on a percentage of the profit your business makes, so consider what would be best for your business. You might also be subject to rental increases, so a little research into what is a normal amount and frequency for these increases in your area might give you a good idea of what to reasonably expect.
These are just a few considerations to bear in mind as you weigh your leasing options. Being savvy about types of rent and expenses will make it easier for you to know exactly what you are getting yourself into when you sign a lease.
If you are looking to rent in an office building in Overland Park , give Southcreek Office Park a call at 913-685-4100 to learn more about our available rental spaces!
Did you know that office space is usually one of the largest expenses for a growing company? Think of what your company could do with some money you save by negotiating the best possible lease. Not all Kansas City office space for lease offers standard terms, but here is a little bit of information on leases that could help you become a little more knowledgeable:
- Terms of the lease. Long term-lessees typically have the advantage of potentially gaining concessions from their landlord. However, the needs of your company may change depending on growth and other factors, so a good middle road might be a shorter-term lease with renewal options.
- Permitted use of the space. Office leases usually include a part that states the allowed uses of the rental space. It is in the lessee’s best interests to make this clause broad in case you want to sublease or diversify your business.
- Rent increases. You will rarely find fixed rent in the case of a long-term lease, so be prepared to negotiate about your annual rent increases, usually based on percentage increases in the CPI (Consumer Price Index). If possible, you can try to arrange for the CPI increase not to start until two years and try to cap the amount of each annual increase, or discuss the possibility of a predetermined fixed increase.
- Subletting and assignment. Your business might want to negotiate a flexible subletting and assignment clause to account for potential reorganizations, mergers, or share ownership changes.
Learning the language of leasing is a good step in making sure that your business saves money when securing your new executive suites in Kansas City.
If you would like to ask questions you have about Overland Park office space for lease through Southcreek Office Park, give us a call at 913-685-4100!
What is a simple way to avoid some of the frustrations of dealing renting Kansas City office space for the first time? Preparation. Knowing a little bit of the vocabulary used by commercial real estate agents can help you stay on top of the process and more effectively communicate with landlords and real estate agents. Here are a few terms that might help small business owners as they look into commercial office rental:
1. Gross lease: A type of property lease in which the landlord takes care of all property expenses included in ownership of a space, such as taxes, utilities, and maintenance.
2. Triple net lease (NNN lease): A type of property lease in which you, the lessee, pays a set rental charge and covers property expenses, including maintenance.
3. Percentage lease: A type of lease in which costs are determined by the percentage of the volume of sales made at that property.
4. Usable area: The part of an office or floor of a building that can be occupied by a tenant, measured from permanent wall to permanent wall.
5. Rentable area: The area within an office that can be used, which includes shared areas of the building and floor such as corridors, lobbies, closets, restrooms, etc.
These and other terms can be helpful to know as you begin your search for office space for rent in Kansas City!
If you would like to talk to one of Southcreek Office Park’s commercial real estate agents about our executive suites in Kansas City, give us a call at 913-685-4100!