Finding an ideal physical Dallas office lease is one thing; negotiating the rental agreement to meet a business’s requirements is another. An agreement basically states the different responsibilities of owner and tenant; as would be imagined, the owner of the building has the primary influence on the terms of the contract. This does not mean that a tenant cannot negotiate with the owner so that both parties can have their interests protected.
Following are some important items to consider when entering into lease negotiations.
- Basic Cost – One of top things that should be negotiated is the monthly cost of the space. This is a sensible thing to do as it is one of the largest business expenses. Before signing a contract, a tenant should check leasing trends in the area to determine a fair market value for the dollars per square foot that makes up the current lease price.
- Increased Cost – It is also important to set a cap on rent increases. Many owners refer to the Consumer Price Index to determine such annual increases. In such cases, it is preferable to negotiate a fixed limit on such annual increases or at least request a delay or a year or two before such an escalation clause would become effective. This is easier to negotiate and accomplish with long term leases.
- Term – Landlords often prefer long term contracts to establish a stable revenue source. For some companies, this might be acceptable; however, such arrangements may not work for a business that is less stable or may require expansion sooner. Usually, owners require a more expensive rate for short term leases. To avoid this situation, an assignment clause can be negotiated in order to prevent incurring penalties if a tenant should fail to complete the term stated on the agreement.
- Common Area Maintenance – Consider the cost of maintenance of the common areas of a Dallas office lease as well. Typically, these expenses are shared among building tenants. Try to negotiate a fixed fee or a cap on the amount as the owner could require a certain amount for maintaining common areas and equipment.
- Improvements – When leasing, it is very important to be able to make improvements on the leased area to customize the looks and functionality according to business needs. It is wise to include in any contract a clause allowing for future tenant modification as needed. Clarify the responsibilities regarding any modification as well whether the tenant must return any changes made during the contract term back to the original design when the current lease expires.
- Assignment/Subletting Clauses – If can become important to a tenant to have an assignment and/or subletting clause included in the contract. Assignment allows the tenant to sublease the space as needed or reassign the space to another renter, both of which is important is a company is unable to complete the terms of a Dallas office lease. Without such clauses, a tenant could be sued for damages for failure to complete the agreed contract term. With these clauses, a tenant can reassign or sub-rent the space without breaking the contract.
Hopefully this article has highlighted the important details that can be negotiated in a Dallas office lease. Reaching a successful conclusion with such a process can be difficult; it is made even more so if the tenant is inexperienced with such a contract. One way to be successful with contract bargaining is to employ a broker or an attorney to represent the tenant during this lease process. This will ensure that the negotiations process will have a successful conclusion for the tenant!