Leasing a commercial lease space can be tricky especially for a new small business owner. It’s important to remember that different leasing companies or landlords have varying terms and conditions with the properties they lease.
In most cases, utilities such as electricity, air conditioning, heating and maintenance such as security, cleaning services, repairs are provisions provided by the office space landlord and the costs are included in the monthly rent fees.
However, some landlords let their tenants shoulder these operating costs separate from their office space lease payments. Knowing the exact conditions of your landlord particularly on costs is crucial to avoid complications later on.
Understanding Lease Operating Costs
Different repayment terms apply for various types of leases. For instance, a Net Lease is when the landlord provides for all the services necessary to maintain the place and charges the costs to the tenant. Understandably, when there is an increase in operating costs, the landlord will increase the monthly lease as well.
On the contrary, a Gross Lease or a Step Lease means your landlord can make changes on the terms of the contract or increase monthly lease payments on a yearly basis. This means, you monthly costs should remain the same until the end of your annual contract.
Certain costs may be imposed by landlords for additional services. For instance, there may be additional fees if the business owner chooses to work and use the office space during holidays or weekends. Additional fees may be imposed as well if you get pass the business hours set for weekdays. Clearly, it’s important to be aware of your landlords policy on these specific situations.
Apart from operating costs, a business owner must also inquire about property tax fees. Will you be required to shoulder this cost or will your landlord take charge of it? You need to be aware of the exact costs of the property taxes.
Capital Improvement Costs
Operating costs should not include major costs for the improvement of the place. If a renovation is necessary, see to it that your landlord will not be imposing additional fees on your monthly lease payments. See to it that this particular issue should be clearly stipulated in your office lease contract.
Bear in mind that signing up your lease agreement binds you to the terms and conditions of your landlord. If some details of the contract skips from your attention, you may find yourself paying for fees you never expected when you first signed up for the lease. Such a scene can be avoided by carefully reviewing your leasing contract.