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Commercial Real Estate

Are you in for a surprise on your office lease? Maybe

When it comes to your office lease, what you don’t know can cost you big time. Here is what you need to look into right this minute.

office space lease

office space lease

Office space and your wallet

Is your lease out of whack? Do you have hidden landmines and built in disasters in your lease? If you answered “I don’t know” to those questions, chances are that you’re in trouble. Now I am sure most of you are responsible business owners and would know every dollar that is being spent on and in your business both currently and in the future, but for the Generation of Slackers out there, may I suggest a lease review, lease audit or maybe an interview with a defense attorney?

What many people really fail to think about is the financial big picture that develops around a commercial lease. “I thought I could do it my self” or “The listing agent said it was no big deal” are the famous last words heard by real estate attorneys everywhere.

Once your lease goes out of control, tempers flare, you get a huge unexpected bill for common areas, taxes, or maintenance, the end result maybe an eviction notice delivered to your door. And it’s all legal. And chances are you agreed to it but didn’t pay attention to the small print or legal jargon in the lease. The problem is that it’s not that difficult to get into, but extremely difficult to get out of.

So how to avoid a lease disruption?

For starters pay no attention to the rent per square foot advertised. Because it is just that an advertisement to get you to pay attention to come look at the space. Second get really familiar with local expenses, taxes, utilities, etc. Write them out on a line item sheet of paper, ask who is paying for them in full, partial, etc.

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The other biggie is common area, this is parking lots, hallways, lobby, that sort of thing. It’s space that you use, and pay for, but is also used by others. What is your percentage of costs for that space? Is your % tied directly to the square footage of the building or on a slide scale? Maintenance stop gap. Know how much in repairs annually you are responsible for ( if any) and what is the max you will pay.

Then take all those expenses and add them up, including your base rent, and then divide by the total square footage in your lease.

You may very well find that the $18 a square foot that was advertised is actually $32 a square foot. You can probably get that figure down some by negotiations with your new potential landlord, so you can both be on “common ground.”

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Written By

With 16 years of industry experience, earning his CCIM designation in 2007, Smith has held various leadership positions from CCIM Chapter President, CCIM Institute Regional VP, to Partner at McFalls & Smith International Development. Today, Smith is a commercial sales expert at Prudential PenFed Realty's Commercial Division, an Advisory Board Member at the University of Baltimore's Merrick School of Business, and a Professor at the Professional Development Institute. Smith has educated hundreds of REALTORS, investors, and small business owners, helping them find success through Commercial Real Estate.



  1. Jeff Brown

    August 8, 2012 at 1:19 pm

    Hey Scott — You save a lotta people a whole buncha cash today.

  2. beachtowne

    August 9, 2012 at 9:20 am

    Also, at Walgreens you don’t get the 2 for 1 price unless you buy 2 . Write that down.

  3. leasefunders

    August 13, 2012 at 2:39 am

    Before you sign any kind of commercial lease contract is to read everything in the deal. You need to read all of the details and make sure that you understand everything in the document because you do not want to be left out in the cold in case something goes wrong. As long as everything looks legit and you have had someone else look over the document as well, you should be fine with signing the lease.

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