4 Questions to Ask Before Signing a Commercial Lease

questionsSigning a lease agreement on a commercial property for your office is a major decision and investment. Before signing, ask the leasing agent a few important questions to make sure you understand the contract and to get the most out of your new office space.

1. Exactly what is included in the rent?

There are many ways a commercial lease can be structured. There are triple-net leases, percentage leases, gross leases, full-service leases, and more. Gross leases typically include expenses like utilities and janitorial services, while triple-net leases charge the client for all operational expenses. Know how your commercial lease works to anticipate expenses accurately.

2. Is the listed square footage the usable or rentable area?

Usable square footage (USF) is the space directly within your office walls. Rentable square footage (RSF) is the USF plus your share of the building’s shared space, like hallways, the walls themselves, and, of course, the lobby.

3. Who is responsible for maintenance?

Figure this out before, rather than after, your toilet overflows. Which issues would be handled by the maintenance department, and which would be a lessee’s responsibility? Think roof leaks, squeaky doors, electrical ballasts, leaky faucets, etc.

4. Is there a rent adjustment each year?

While most commercial lease agreements allow for annual increases in rent, there are different ways to structure it. The three most common formats for rate adjustments for an office space are:

  1. a fixed increase each year;
  2. a variable increase to account for the property owner’s operating expense increases;
  3. an adjustment based on the Cost of Living Adjustment (COLA) for your geographical area, say Boston, MA, determined by the U.S. government, to keep dollars current throughout the lease term.