The commercial real estate world is shifting, and landlords no longer control the game. Recently, businesses have been gaining a huge upper hand in acquiring Kansas office space for rent for great rates. Below are some negotiating tips for taking advantage of this trend and securing an affordable space for your business, as described in the article “How to Get a Good Deal on a Lease”:
Concessions in Your Office Space Lease in Overland Park
Because it is a renter’s market, don’t be afraid to be a bit bold in asking for concessions, including periods of free rent. This is especially true if your business is willing to take a bit of a risk and agree to a longer lease term. Conventional wisdom says that shorter term leases are better for new businesses, but these days landlords are so interested in getting long term tenants that they are willing to agree to a lot more. Since it might take a landlord as much as a year to find a new tenant for a space, they have a vested interest in offering businesses sweet deals to entice them into longer terms.
Create an Exit Plan in Your Lease
The lease a landlord gives you will be heavily in their favor, but that does not mean it is the agreement you have to end up with. Negotiate for clauses to create a little more security for you, and be sure to prioritize your needs. Think about what your deal-breakers are, and focus on pushing for those things before trying to push a long list of changes. Here are a few suggestions for ways to protect yourself in a lease:
- Guaranteed Selling Points – Sometimes landlords advertise specific selling points, like high foot traffic or a certain occupancy rate, to attract tenants. Try to get these guarantees in writing and ask for concessions if the landlord does not uphold them.
- Sublease – This is a common way tenants can protect themselves in the event that they want to leave a space or downsize before their lease is up. A subleasing clause allows a tenant to rent out some or all of their space to another, similar business.
- Personal guarantee release or ‘Good-guy” clause – Most landlords will ask for some sort of personal guarantee, but there are clauses can mitigate the potential damage done if your business has to leave. In a personal guarantee release, the landlord lifts the guarantee obligations after a specified period of time, maybe 2-3 years into the lease. A “Good-guy” clause replaces the guarantee and says that a tenant who defaults on a lease is only responsible for the rent they owe before they leave the space, instead of until the end of the entire lease term. This is fairly uncommon outside of New York, but worth asking for.
- Exclusivity – This clause protects businesses from a direct competitor moving into the property.
Beware of Hidden Costs For Commercial Property For Lease in Overland Park, KS
Leases come in different forms: gross leases and net leases. Gross leases generally include everything – taxes, maintenance, utilities, etc. On the other hand, net leases involve billing separately for taxes maintenance, insurance, etc., and these things are prorated based on how much space a tenant occupies. Regardless of which kind of lease you enter into, make sure you know exactly what expenses you are paying for, particularly when it comes to common area maintenance. These expenses will probably increase over your tenancy, but you can negotiate to ensure that prices won’t go up within the first year.
Another hidden leasing cost to be aware of is repairs and maintenance. Some landlords want tenants to pay for any repairs or updates to things other than the exterior walls, the roof, or parking lot. This means that the age of a building could really affect how much you end up paying for maintenance and repairs. Have the HVAC systems, electrical equipment, and plumbing inspected before you sign the lease, and bring up any warning signs in your negotiations.
Find Trustworthy Commercial Real Estate Brokers
Be careful about which brokers you trust. Remember that often landlords are paying a broker’s commission, so the broker might be biased in negotiations. Trust your real estate lawyer, and ask them for recommendations of good brokers, as well as have them double check details of your lease.You also want to make sure that the broker you work with has experience with the particular type of commercial real estate you are looking for.
That said, a good broker is essential to negotiating a good deal, since brokers will know the market and what concessions landlords are generally willing to give. Be proactive with your broker and don’t settle for a simple, standard lease.
This is a great time to take advantage of a renter’s market, but it is important to be a savvy negotiator in order to seek out the best concessions and avoid all the pitfalls of a commercial real estate lease!
If your business would like to rent office space in Overland Park, give us a call at 913-685-4100 to arrange a tour of a commercial office space for rent in Overland Park, KS.