Few businesses can start the operation in their own building. Most startups decide to lease office space for the business. In fact, office rental is one of the biggest expenses startups must spend. Therefore, tips to start a business also include some key issues that must be considered when renting an office space for your business. They are particularly related to how to negotiate the best least deals and save your working capitals.

Tips to Start a Business: How to Negotiate Office Rental Expenses

Ability of a startup to negotiate an office space depends upon your advantage. For instance, if the same office is vied by other companies, the negotiation may be tougher. The case is different when the space has been vacant for few years. In fact, no lease price is standard, as it is determined by many aspects. Therefore, make sure to consider the following aspects:

Length of Lease

The longer you lease the office space, the more chances for you to negotiate the lease price. However, rarely do startups lease an office space for long term, since they are not sure yet about the company’s needs. They may change with time, depending upon the business dynamics. Therefore, you can try to negotiate short-term lease but with options of contract renewal.

Increase of Rent Costs

Few landlords are willing to charge fixed rate for the tenants. Most of them choose variable one, since they can increase the rent costs after one or two years. They usually adjust the rent to the Customer Price Index (CPI). Accordingly, you can negotiate this from the beginning. You can negotiate a pre-determined price increase index. For instance, both of you may agree an annual increase of 5% to 10% in the rent costs. This way, you can calculate the need for rental expenses every year.

Improvements, Repairs, and Replacements

After using the office space for several years, you cannot expect that the building is still in the same conditions. Many tenants are involved in problems due to clauses that put them in difficult positions. In fact, some landlords put the requirement that you must be responsible for every damages to the building during the lease period.

So, make sure to agree the tolerable damages or repairs that become the landlords’ responsibility and those of yours. In addition, you need to agree on who is responsible for minor improvements and replacements.

Avoid One-Sided Provisions

Some landlords keep trying to benefit more from the tenants. Some of them even one-sided form lease agreements. Make sure to pay a close attention to unfair agreements, such as:

• The landlords may pass on increased operating costs to the tenant. They may include building repairs, property taxes, or insurance premiums.
• The landlords may try to avoid being responsible for compliance with environmental law.
• They may try to get the right to cease the contract at their convenience

As this is a huge expense, make sure to consider it carefully. Tips to start a business may include hiring a tenant broker if you do not have any background knowledge about this.