We’ve all heard the expression that businesses do best when they run like a well-oiled machine, implying that through regular maintenance and review they can maintain optimum performance. For business owners this means keeping a keen eye on all of the working parts to ensure they are meeting your needs. Strangely though, one of the largest financial obligations businesses have goes without annual review, their Commercial Lease Agreement.
Many businesses assume that once their commercial lease agreement is signed its only use is to collect dust in the back of a filing cabinet or sitting forgotten on your hard drive. Many are unaware that their lease agreement contains crucial material that must not go unnoticed such as dates, deadlines, terms and conditions. Common examples include renewal and move-out notices, as well as right of first offer and right of first refusal deadlines. Failure to review your lease agreement could be a costly mistake and disruptive to your business so take it upon yourself to know all of the terms and conditions. You’ve taken the time to make your business run like a well-oiled machine and meet your needs, make sure your office space is meeting your needs too.
Here are 5 Tips to remember when it comes time for your annual commercial lease agreement review:
- Have your lease backed up and be sure you know where to find it
- Know when your lease expires including the date you must give notice to renew or move
- Be aware of what options are available to you in your building if you currently lease too little or too much space
- Familiarize yourself with the rental rates of similar buildings in the area and use them to compare with your own
- If you have the option of right of first refusal (ROFR) or right of first offer (ROFO) know the terms and deadlines
Another great resource is to contact your commercial real estate agent or broker that negotiated your initial lease. They are educated in renegotiating your lease and can often get you better rates or additional money in tenant improvement allowance if you’ve been a good Tenant and the Landlord would like to renew your lease.
Use these 5 Tips as a guideline when doing your annual lease agreement review. This will put you ahead of the curve for important deadlines, terms and conditions and allow you to better judge if your current lease is satisfying your business needs both now and in the future.
Jennifer Smith is a highly skilled commercial real estate advisor in Austin, TX for businesses seeking office, retail, warehouse, or medical space.