Although the costs associated with office leases represent a significant expense for companies, tenants often do not pay enough attention to clarifying these costs and reducing them by negotiating favourable terms. With our article, we aim to assist tenants by presenting the full range of fees and costs related to office leasing and providing useful cost-saving tips.
The costs associated with office leasing represent a significant burden for businesses.
Lease agreements are usually concluded for a fixed term, meaning that the tenant commits at the time of signing to pay the rent and other related costs for the entire duration of the lease. During this period, the tenant generally cannot unilaterally terminate the contract. Therefore, rental costs represent a significant burden. It is important when choosing an office to consider all cost items and plan for the entire lease term.
Every cost component and every lease term is equally important when renting an office.
Before signing the contract, it is therefore advisable to clarify all cost elements borne by the tenant—rent, fit-out and operating costs, utilities, security deposits, tenant insurance—and make a decision based on this.
Ask about this and include it in the lease agreement:
- who pays the costs of fitting out the leased property,
- whether there are cases in which a rent reduction or concession can be requested, and what happens in the event of force majeure,
- what is included in the operating costs,
- whether there are any other costs related to the maintenance of the leased premises that do not fall under operating costs,
- whether it is necessary to provide security (a deposit or a bank/corporate guarantee),
- whether insurance (liability and property insurance) must be taken out,
- whether it is possible to terminate the contract, and if so, under what terms and conditions,
- whether there are options for returning, expanding, or extending the premises,
- what are the terms and conditions for contract termination,
- whether there are any change of control clauses,
- whether the tenant is allowed to make changes to the leased premises,
- whether the leased area can be sublet,
- whether the company logo may be displayed on the office building.
The attorneys at LeitnerLaw will be happy to represent you and your business in preparing lease agreements and negotiating terms. Create predictable and secure lease terms with our help!
Clearly define in the
contract the exact conditions for exercising any options that may arise and try
to ensure that the tenant has the opportunity to make informed decisions and
that the options help reduce costs. Do not accept limitations on the landlord’s
liability beyond what is permitted by law. For the termination
conditions, aim to include multi-step termination clauses so that the tenant can
correct any potential breach of contract in time. If possible, do not
accept change of control clauses that could affect changes in the
tenant’s ownership structure.
Clarify what is covered by the operating costs, account for them transparently, and limit unilateral increases.
Familiarize yourself
with the permitted use of the property and obtain the necessary permits
in advance.
Tenant-friendly office market environment
It is definitely worth bearing in mind that office building occupancy rates are relatively low in many places today, which makes it possible to obtain more favorable terms and renegotiate previously signed contracts. In addition, landlords are willing to lease smaller areas or sign contracts for shorter lease terms with flexible terms.
More and more people
are choosing the services of office buildings that provide larger
communal spaces, where tenants can reduce their costs by renting smaller
offices, as they use the communal spaces. However, this can lead to higher
operating costs. Serviced office and co-working space
solutions offer greater flexibility, and tenants do not have to worry about
furnishing the leased space, but the fees for these are generally higher.
