Negotiating the Best Office Lease for Your Business

Common area maintenance, HVAC, and operating costs. Take into account operating costs that the landlord may pass on to a business. If the landlord is charging separately for these services, try to negotiate a fixed fee or cap on the amount.

Tenant improvements. New space may need some improvements or alterations. Most form leases provide that the tenant can't make any alterations or improvements without the landlord's consent. Businesses should ask for a clause that says they can make alterations or improvements with the landlord's consent and that consent won't be unreasonably withheld or delayed.

Repairs, improvements and replacements. Be aware of a clause that says that at the end of the lease premises must be returned in their original condition.

Assignment and subletting. Companies should negotiate enough flexibility in the assignment and subletting clause to allow for mergers, reorganizations, and share ownership changes.

Option to renew. Try to get the option to renew your rent at a fixed predetermined price, not based on a "fair market" price.

Right of first offer or first refusal for additional space. A right of first offer obligates your landlord to present any space that becomes available in the building to you first before marketing it to third parties. A right of first refusal on space obligates the landlord to bring you any deals he is willing to sign with third parties for space in the building and allow you to match the deal and preempt the third party. See Option to Expand Under Office Leases for more information.

Ultimately, if a prospective landlord is difficult to deal with during lease negotiations or makes unreasonable requests, you might want to consider leasing office space elsewhere. Also, have a good real estate broker and lawyer at your disposal, and do not sign anything without having them review the terms in advance.

For a complete overview on the topic, see the Step-by-Step Guide to Finding Office Space.