There are a number of factors to take into account when leasing commercial premises – here are the most things to consider before signing a lease agreement.
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Working in your own company is one of the lifelong ambitions for most Australians. For those that take the plunge into entrepreneurship, they are faced with an abundance of additional tasks and responsibilities that needs to be managed. For those businesses that require a physical presence, it is likely that they will get into commercial property leasing. For those people who have never been involved in a commercial lease agreement, it is important to know exactly what you are getting into and what potential impacts you could face.
Check the fine print in the lease
It is important that you are completely aware of the specifications in your lease agreement and what is included:
- Will you receive a street address? Will you have permission to make changes within the space? (For example, will you be allowed to paint the walls or make any custom changes to the building to suit your business’s needs?)
- Does the lease agreement include or exclude any additional rates or taxes outside of the space hire?
- When it comes to the maintenance of the building (cleaning, upkeep, electrical and mechanical plumbing), will the responsibility be on the commercial landlords or on you?
Check to see if you are allowed to sublet the property
This will be dependent on the landlord. Some landlords have no issues with using sublet properties. Others do. If you have any intention to sublet your property, make sure that it is permitted in your contract.
How much space will your business require?
You don’t want to get yourself stuck in a lease if your organisation is going to outgrow the space. Forecast the amount of space that you feel your office will need immediately and account for employee growth.
Ensure that your office has breakout spaces
It is important for your property to have dedicated space for your employees to eat and prepare their food, as well as breakout areas. There are properties that don’t offer these. If this is the case, discuss alternative options to see if they can be negotiated into the lease agreement.
Location of your business
The location of your business is really important for the long-term outlook of your business’s growth. Your business needs to cater for operational efficiency. Getting the cheapest office room in a countryside warehouse may attract few, but you need to consider if your location will attract the employee talent that you will be seeking. Additionally, you need to consider the needs of your distribution and supply management from your location. Will it incur additional costs? Or could it hamper your businesses opportunities? These are a few considerations to keep in mind.
How will any disputes be managed?
Unfortunately, disputes do happen. However, the majority of dispute issues can be prevented if the clauses within the lease are complimentary to both parties. This means that the tenant business should not be afraid to negotiate for better conditions or better rates in exchange for a lease agreement. It is recommended that you seek a legal advisor that can help you understand your contract thoroughly prior to signing the lease.
Whatever you negotiate, make sure it is in writing
When it comes to signing the lease, ensure that all of the agreements and clauses that have been negotiated are published in the contract in writing. If it isn’t in the contract and a dispute arises, you won’t be able to prove your case.
Below are a few external resources that will guide you on commercial leasing across the Australian states:
Australian Government Business Resource
Starting the operations of your business should be a smooth experience. Ensure that you fully understand the lease agreement you are entering into so that you can avoid any potential disputes or setbacks, as well as maintain the energy to focus on the main activities for you to run your business.
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