4 Things to Negotiate in Your Lease
It’s easy to get caught up in the idea of a shiny new office and forget about the crucial elements of lease negotiating. Here are 4 fundamentals to work through with your new bestie (a.k.a. your broker) before you sign, seal, and deliver a new office to your team.
The right to sublease: What is your headcount projection for the next 12-24 months? It’s common for teams to outgrow an office more quickly than anticipated (Yipp-ee! Growth!). You want favorable subleasing rights so you can easily rent out the space to another company. If you don’t prioritize subletting rights, you may have to completely buy yourself out of the lease. That gets expensive real fast.
The right of first refusal: On the flip side, a perk of larger buildings is the opportunity to grow and expand to other floors. For fast growing companies, add the option to expand by negotiating a “right of first offer” or “right of first refusal.” When another tenant moves out the landlord has to give you the first choice to take over the newly vacant space. This is a great option to avoid having to move buildings while still allowing you to grow (and gives you the potential for fabulous roof parties someday). Have your broker research who might be moving out and when before you sign on the dotted line. If the building does not see high turnover or someone already owns floors 7-40, it may not be the best fit.
TI’s (Tenant Improvements): To entice you, landlords will often earmark funds for additional conferences rooms, a new kitchen, exposed staircases, or whatever your heart desires. These are called TI’s or “Tenant Improvements.” Longer leases get more funds from the landlord to improve the space. Make sure you fight for as much TI money as possible. Your broker should also help navigate you to the best remodel ideas. Landlords have wiggle room with TI budget, and they often expect to negotiate.
Culture: Before embarking on an office search, take more than a moment to think about how your physical space reflects your culture. Do you want a kitchen with an oven because your team loves to cook? A clause that allows pets? Access to the roof deck? Weekend security to make employees feel extra safe? Do you want gender neutral restrooms? Your company’s cultural must-haves can be worked into the lease. Make sure to use the lease to help create a space that is uniquely yours.
A great broker should be your best friend through the leasing process. She’ll help you navigate to the perfect space and negotiate the best terms. By remembering the points above, you’ll create an amazing new home for your team.