Here are five points to ponder before signing on the dotted line:
Understanding the strategic value of the neighbourhood and community in which one leases is a critical factor in ensuring that you get value for money. For instance, businesses 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 be non-negotiable. Management should always choose a location which aligns with its own values in terms of providing employees, visitors and staff with the best choices in terms of amenities such as shops, schools, gyms and excellent transport hubs, thereby promoting work-life balance and convenience.
Tenants (clients in our world) should always ask about common area maintenance. What is common area? These are typically spaces shared by all tenants in a building or precinct and normally includes services such as security, landscaping, cleaning amongst others. As a tenant, one should clearly understand what the common area services are and also what the tenant’s share of these costs would be once the lease agreement is signed. These costs are typically called “operating costs” and should be clearly defined to avoid confusion later. Lastly, most agreements hold tenants responsible for the internal maintenance of their exclusively leased premises.
Cost of occupancy refers to the total monthly cost 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 rates and taxes. These costs are usually quoted vat-exclusive. It is also important to establish who your electricity supplier is as the rates charged can differ.
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 is used towards partitioning, carpets, painting and the like. Ensure that you understand exactly 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 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. Turnaround time will depend on the complexity of your design and the size of your premises.
It is important to have a landlord that is as much committed to the partnership as you are. Have a careful look at the common areas in the building or precinct you are about to move into, establish the landscape and 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.
In closing, when choosing the space for your business, there are a number of 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 other stakeholders’ needs.
