Leasing an Office is Not only about the Rent – what to Remember when Deciding on an Office

There comes a moment in the life of every entrepreneur that the thought of leasing an office passes through their mind. Regardless of whether these considerations will end in the signing of a lease agreement or not, it is worth considering what this step involves.

 

Usually, when considering the issue of leasing an office for a business or looking for a suitable premises, the tenant only takes into account the costs of the rent itself. When analyzing the amount of the monthly commitment, they focus only on multiplying the price of a square meter by the size of the space, adjusted, in turn, to the size of their company, its nature and needs. Meanwhile, from the very beginning, you should also take into account other costs and intangible issues that have a significant impact on the comfort of using the office and the company’s budget.

 

Rent + utilities + taxes

Firstly, the rent itself is not enough. In addition to the fees for providing space, the tenant is usually also obliged to cover the so-called operating costs, i.e. fees related to the functioning of the property. These include cleaning and protection of the building, garbage collection, maintenance of internal and external common areas (including, for example, lighting, maintenance of installations and maintenance of green areas), provision of fire supervision, repair and maintenance of the roof and basement of the building; maintenance of information systems and setting of directional signs in internal and external common areas, but also the payment of city fees and other taxes related to the building and land; insurance premiums and costs related to property and building management. In addition, utilities in the rented space may also be payable – Internet access, electricity, water, air conditioning, cleaning services for your own premises. You may also need to pay a parking fee. An important issue is also the fact that the rent is usually contracted in EUR   and repaid in PLN, so you need to take the exchange rate risk into account. And as a reminder – prices are quoted net.

 

 Shopping for the office

In addition to the costs included in the lease agreement, there are always costs of using the office, resulting from running the company, such as paper and toner for the printer, the purchase of the equipment itself, furnishing the office with furniture, and even coffee and tea. The same applies to the costs of renovations, such as refreshing walls (these costs are not incurred in the case of using a flexi office, because in the vast majority of cases they are included in the lease price). In the case of a standard office, the landlord is not responsible for the tenant’s belongings, they are obliged to insure only the building, but not the tenants’ movable property. Therefore, the tenant’s expenses also include the cost of insurance – e.g.  in the event of theft and third party liability.

 

Costs calculated in months

When deciding whether a company can afford to lease an office, you need to think ahead. The fact that today the company is in a good or promising financial situation must be certain for the next few years, because office lease contracts are long-term contracts. As a standard, they are signed for a five-year period, and therefore appropriate resources must be included in the company’s budget. It is true that in the current situation, caused by the coronavirus pandemic, owners are more willing to agree to flexible terms of contracts, taking the possibility of unforeseeable events on the market into account, however, the tenant is still obliged  to maintain a specific notice period, present appropriate bank guarantees or secure a deposit allowing for the repayment of financial obligations to the landlord. In the event of early termination of the contract, the tenant usually also incurs additional costs.

 

Benefits to negotiate

There is also good news – building owners and managers, in order to encourage tenants to visit their premises, use various incentives, including those that directly affect the cost of maintaining the office. Thus, for example, “rental holidays” are possible, i.e. periods of exemption from rent payments, exemptions from parking fees or even from the costs of space arrangement, free space for the tenant’s logo on the facade of the building or financial contributions, e.g. for moving expenses. It is also worth remembering that most of the fees and lease conditions are negotiable. Starting from the rate per square meter, through additional fees (for parking, advertising space, etc.), to such detailed terms of the contract itself as the possibility of subletting space to third parties or the size of the leased space. However, this must be checked before deciding to sign the contract. We will be happy to help you both in determining the actual cost of renting office space and in selecting the most optimal solution for each company.