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Nov 7th, 2012 | | How to | Comments Off on Hidden Costs When Leasing Office Space

Hidden Costs When Leasing Office Space

Common Hidden Costs Associated with The Office Lease

Office space lease is one of the largest expenses a business incurs when operating a business. Although the office lease can be a fixed dollar amount, it is often supplemented with additional payments that can lead to unexpected costs and inaccurate projections.

Property Management Fee. This could be anywhere from 2 percent to 5 percent of the rent as a fee to manage the building. The tenant should negotiate the fee in advance.
Cost of Improvements and Upgrades. If the leased premises is going to be altered or improved by the tenant, it will likely be done at the tenant’s expense.
Miscellaneous Maintenance. Check for excessive repair and maintenance costs. If you don’t read your lease carefully, your landlord might just include a cause that dictates that only their workers can change the light bulbs in your office space. That means they could potentially charge you a fee every time a light burns out.

Inappropriate Operating Expense Bills. When a tenant signs a lease, the business owner often adds up the lease payments under the lease and thinks that is the total extent of the obligation. These operating expenses are the taxes, damage and destruction insurance and common area maintenance expenses that the landlord incurs to maintain the building.

Other Operating Costs. Other costs, such as late charges, charges for heat and air conditioning during non-business hours, cleaning costs and provisions for payment of utility bills, must all be reviewed and assessed.

Utility, Tax, and Maintenance Costs. Check to see if they’re covered. Leases for office space come in a number of different forms, and they don’t always include the building’s utility, tax, and maintenance costs as part of the monthly rent payment. It is a serious mistake to assume that a landlord would include these into an office lease by default.

Increasing Tax and Maintenance Charges Over the Leasing Period. In many cases, a commercial landlord will charge a client extra money per month for things like property taxes and the maintenance services will clean the offices during the evening hours. That’s pretty standard, and it’s a charge that most companies are willing to accept.
However, some landlords have gotten pretty creative with these fees and they’ve actually begun charging “escalating “costs over the term of a multi-year lease for every tenant they house in their facility.

Costs Associated with Extending or Breaking the Lease– When reviewing your lease terms check to see if there are any charges associated with extending the lease or terminating the lease ahead of the end of the lease term.

Preexisting Condition Clause. Most leases have a clause that states that when you move out of your office space, you must deliver it back to the landlord in its pre-existing condition. This clause is enforced by landlords at the time of move-out and it will require the business to tear down any fixing, decorations. new walls, remove all furniture and other items, and get rid of any non-approved color applied to the walls during their time in the space.

Reviewing your leasing terms, hiring a tenant broker or attorney to represent you or review your leasing contract and effective negotiating can resolve these issues and save your business thousands of dollars.
At Hollman Las Colinas Business Center we believe in fair office space leasing practices and are committed to help your business to succeed. Call us today at 972 331 2629.


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