Value for money is key when leasing new business premises

Now more than ever, leasing office space for your
business is daunting as the country transitions out of the national lockdown.
With remote working part and parcel of our daily experience, both small and
large businesses are scrutinizing lease agreements and asking the important
question: Are we getting value for money?

Attacq’s Head of Asset Management (Commercial), Debbie
Theron shares her five most important points to thing about before signing a commercial
lease agreement:

  1. Location

Understanding the strategic value of the neighbourhood and
community in which you lease is a critical factor in ensuring that you get
value for your money. Businesses who are reliant on client walk-ins require
business locations that offer a broad range of lifestyle and entertainment
choices. In addition, convenience and secure parking should not be negotiable.
Management should always choose a location which aligns with its own values in
terms of providing employees and visitors with the best choices in terms of
amenities such as shops, schools, gyms and excellent transport hubs which
promotes work life balance and convenience.

  • Who pays what in the agreement?

As a tenant, you should always ask about common area maintenance.
What is common area? These are typically spaces shared by tenants in a building
or a precinct that normally includes services such as security, landscaping,
and cleaning amongst others. You need to understand what the common area
services are and what your share of these costs would be once you have signed
the lease agreement. These costs are typically called ‘operating costs’ and
should be clearly defined to avoid confusion later. Most agreements hold
tenants responsible for the internal maintenance of their exclusively leased

  • Cost of occupancy

This refers to the total monthly costs related to your
tenancy. It would be wise to obtain an estimate from your prospective landlord
upfront so that you can budget accordingly and not be surprised at a later
stage. These costs include rental, parking charges, operating costs, all
utility charges, levies and your proportionate share of the rates and taxes –
usually all quoted excluding VAT.

It is also important to establish who your electricity
supplier is as the rates charged can differ.

  • Decking out your new offices

Depending on the salient terms of your lease (rental and
lease period are considered), you may be offered a tenant installation
allowance. This is an allowance provided by the landlord towards the fitout of
your new space and it is used towards partitioning, carpets, painting etc. You
need to ensure that you understand what is on offer and what it covers as the
various landlords do have different criteria.

The important principle is that this allowance must be used
to upgrade the premises you are about to move into, and it is not an allowance
towards furniture and tenant specific installations such as a bespoke server
room. Understand how long your fit out will take and plan accordingly and
turnaround time will depend on the complexity of your design and the size of your

  • A vested landlord

It is important to have a landlord that is much committed to
the partnership as you are. Look carefully at the common areas in the building
or the precinct you are about to move into, establish the landscape and the
rules of engagement with the landlord upfront and remember that the lease you
sign with your landlord is the beginning of a long-term relationship.

When choosing the space for your business, there are numerous
factors to consider but what is paramount is how your business strategy aligns
with the location and the landlord. Choose a location that aligns to your
business, employees, and your stakeholders’ needs.

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