NFIB

How to Lease More for Less
09/ 16/ 2003

by Jeffrey Moses

Things are not always what they seem -- and that includes the price of leasing office space. Lessees hold more cards than they think in negotiating the price and terms of a lease. To get the best deal, consider the following next time you are looking for new office space:

Shop around. When searching for office space, look at as many locations as possible. Don't become emotionally involved with one of the spaces. By remaining impartial, you'll have the best chance to negotiate the best price. Always remember that the owner has a pressing financial need to lease a space. Every month that passes costs the owner money out of pocket. This knowledge can give you the strength and patience needed to negotiate an attractive lease situation.

Give yourself time. Similarly, you should begin searching for space as early as possible so you're not in a time bind. Nothing reduces your negotiation advantage more than having to find a new space in less than a month.

If the price won't budge, try to change the terms. Ask that the owner of the building pay utilities, trash collection, janitorial servicing, maintenance and carpet cleaning. Achieving this can effectively lower your lease rate. Along this line, you should consider any additions or upgrades to the space that could be made before you move in. If the owner will take care of these at no charge to you -- and without raising the lease price -- you'll be receiving more for your money.

Ask for early cancellation. If you are signing a long-term lease, insist on the right to cancel your lease after a specified period. For example, ask that you can renegotiate or cancel your lease anytime after the second year. This will give you greater flexibility in case lease rates go down during that time and you can find a better deal elsewhere.

Negotiate the right to sublease part or all of the space at any time. This gives you the flexibility to move out and let another company move in, enabling you to continue your lease payments. It also gives you the chance to lease out part of the space, helping you pay for the lease if times get tough. Note: if you sublease part or all of the space, you may be able to charge a higher square-footage rate than you're paying, thereby making money on the sublease.

Get the renewal rate increase in writing. Negotiate a fixed percentage increase for renewal of the lease. For instance, having a contract that caps your increase to 10% should you choose to renew your lease will protect you from rate increases. To make this effective, you'll have to secure the right to renew the lease at the end of the term.

Find out about free perks. These could include: free Internet capacity upgrades (DSL, cable, T-1, etc.); free storage space on premises (this could save you storage costs every month of the lease); free use of office furniture and accessories such as desks, chairs, cubicle dividers, drapes, etc. (the owner may have such items stored and unused); shared receptionists (when you can share a receptionist with other companies leasing in the building, you may be able to reduce your total salary outlay); shared conference areas; and shared copier, printer and fax.

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