Your office space lease agreement is the document that will determine what is and is not your responsibility when it comes to the space that you will be leasing. It is signed by both the lessee and the landlord and represents a legal and binding agreement made between the two parties. Failure to adhere to the guidelines put forth within the document could mean legal recourse, fines, or even eviction from the space. That is why it’s so important to know what you are getting into before signing on the dotted line. Read on to understand more about what you should know and how you can protect your own interests.
The first important component outlined in your office space lease agreement is the actual boundaries of the space you will be leasing. This might be an entire building, or it may be a defined space within a building. Having this information is particularly important if your leased space will be within a larger building. It will help you to determine what portion of the property is strictly yours throughout your lease, what common spaces are available to you, and what areas are prohibited for your use.
Length of Lease
Your office space lease agreement will also outline how long you are legally contracted to occupy the space (pending all of the other constituents of the document have been adhered to). Commercial leases are typically much longer than residential leases. The average commercial lease will run anywhere from three to ten years. It’s important to get very clear on the length of your lease because you will want to know how long you are committed to your end of the bargain.
Another important factor contained within your office space lease agreement will be what expenses are covered as a part of your monthly rent. There are quite a few different types of commercial leases, and each one will cover different costs. Here is an example of the three main lease types you will likely encounter:
- Gross Lease: In this type of lease, the tenant’s rent is intended to cover all of the property’s expenses in one fixed, monthly payment. Some of these expenses might include property taxes, insurance, utilities, or maintenance, among others. For this reason, the base price will typically be higher for the tenant. It is, however, still often preferred because it clearly defines the month to month obligation of the lessee.
- Net Lease: Net leases are much more adjustable, where the tenant pays a base rent plus certain fixed operating expenses. There are three different types of net leases, the single, double, and triple. In a single, the tenant pays their base rent plus a portion of the property taxes, utilities and other services. A double is similar, although the tenant is usually also responsible for a portion of the property insurance. In a triple net lease, the tenant is responsible for a portion of the property taxes, insurance, AND CAM (common area maintenance) on top of their base rent.
- Modified Gross Lease: This is a much more flexible lease, where the negotiations agreed upon will determine the base cost of the rent. The lease rate will not change even if associated costs fluctuate.
Another important piece of information contained in the office space lease agreement is how the space is to be used should the tenant’s situation change. It will outline whether or not the tenant has the right to sublet the space. This can happen for a multitude of reasons. Perhaps the tenant finds that the space is too large for their purposes and they have additional space they would like to lease out to another tenant. Another reason might be that the company needs financial help and bringing in an additional tenant could help them to pay the bills more easily. Finally, if a tenant may need to break the lease, this will determine how that situation would be handled.
No matter what your office space lease agreement looks like on the surface, it’s important to have it looked at by a team who has your best interest at heart. Working with a commercial broker and their team of law professionals will help to ensure that you get the best deal that will have you happy and protected.
Looking to Lease Commercial Office Space in Hattiesburg?
Whether you are a tenant looking to lease office space or an owner in need of a quality tenant, SVN | Southgate Realty, LLC is your first choice for commercial real estate in the Hattiesburg area. Our team of dedicated Advisors works around the clock to pair the right clients, ensuring a transaction that will leave both parties fully satisfied. Take a look through our available listings today and contact a team member to get started.