Leasing Office Space: 14 Questions to Ask Before Signing the Contract

Leasing office space is a big financial decision. Whether an owner is renting space for their business for the first time or relocating, they’ll want to get answers to these 14 questions to ask before signing a lease agreement.

Leasing office space is just plain scary. Often, a business owner has to sign a multi-year lease, and the monthly rent may be higher than a home mortgage, even for a very small office. Worse, the contract may leave an owner on the hook for rent payments even if they have to move because they outgrow the space or the business closes.

That’s why it’s important to evaluate the location, the building, the terms of the lease, and even the landlord before signing a commercial lease. This guide walks through some of the key factors to investigate.

14 Questions to Ask Before Signing a Lease For Office Space

There’s no one-size-fits-all approach to choosing office space to rent and signing an agreement, but here are 14 key questions to ask.

1. Is the business building for the future?

Depending on where someone’s looking to rent office space, they may find landlords expect lessees to sign a 3- to 5-year lease (or possibly even a 10-year lease). If an owner chooses their space based on the number of employees they think they’ll have a year from now, they could easily outgrow the space before the lease is up.

Alex Cohen, a commercial specialist at CORE Real Estate, advises business owners to opt for more space than less because they can probably rent any surplus space later on. But if they do plan to rent surplus space, they’ll need to ensure their lease agreement allows them do so.

2. Is the location safe?

Attracting quality talent isn’t an easy task for small businesses. It will be even harder if the building where the business rents space is in an unsafe or desolate part of town, in a location with many vacant or run-down buildings, or near a spot that attracts unsavory characters. 

3. Is the office space adequately equipped for all business needs?

Space may be less expensive to rent in older buildings, but older buildings don’t always meet the practical needs of today’s businesses. Sometimes, business owners rent an older building on Main Street, only to discover that they trip a circuit breaker if two people use the microwave and the copier at the same time. That’s…problematic, to say the least.

Even newer buildings can have some limitations. There may not be adequate electrical outlets or LAN connections in the office, or they may not be near enough to where employees want to place desks or equipment. If a business needs its space rewired to meet its specifications, it can cost a significant amount of money, even for a relatively small office. 

Water pressure can be another one of those utilities that shouldn’t be an afterthought, especially for food service businesses (or even health professions that require frequent hand-washing). If the unit doesn’t have adequate water pressure, it could be a huge hassle.

4. How much will furniture cost?

Cohen says that too many tenants consider furniture too late in the process. He advises that furniture delivery is often 4 to 6 weeks. “Even if a space build-out is complete, the absence of installed and wired furniture means a tenant cannot open for business.”

Second, during the buildout of the space, the furniture should drive some of the planning, especially for wiring. If a business owner signs their lease early, they might find themselves struggling to balance both rent and furnishing costs at once.

RELATED: Office Space Alternatives to Working at Home

5. How much will the monthly rent increase each year?

Many leases will have annual percentage rent increases built in. These should be spelled out clearly in the lease agreement. To keep rent from skyrocketing at the end of the first multi-year term, some small business owners try to have the lease written with an option to renew at the same predefined increase rate.

If a renter doesn’t have an option to renew, a rent increase could be substantial when they go to renew. That could leave them stuck with either paying the higher rate or paying a substantial sum of money to move to another location.

6. What’s included in the lease terms?

The costs for leasing office space are rarely limited to just the monthly rent cost and a security deposit. Smart business owners find out in advance what expenses are and are not included as part of the lease agreement.

What utilities will the business have to pay for? Will the company have to pay for trash pickup, lawn care, cleaning business fees, snow plowing in the winter, or any other common area fees? Is renters’ insurance required? Is the security deposit refundable?

Ultimately, business owners need to take time to understand the full agreement before jumping into lease signing. If a required expense isn’t included in the rental agreement, it’s prudent to ask how much the monthly cost has been in the past. Don’t be taken by surprise after signing a multiyear lease.

7. Who handles repairs and maintenance requests?

When someone leases a house or apartment, it’s customary for most landlords or property managers to handle repairs and any related expenses. But with commercial leases, those expenses might fall to the business, or there could be additional fees for for repairs and maintenance requests. Business owners will want to make sure these terms are spelled out in the lease.

8. How many cars drive by, and are they able to turn into the parking lot easily?

Local traffic is an important part of a smooth renting experience for many first-time renters (and veteran renters alike). Many landlords will be able to provide an accurate estimate of how many cars drive by each day. It would be nice to know a count of pedestrians and cyclists, too. Is foot traffic consistent during the day or during rush hour?

If they don’t have this information but a business owner is still interested, they’d be wise to head to the area and do a count on their own. Alternatively, the city government might be able to give valuable insight into local traffic. Counting can feel like a tedious job, but signing a lease is too big of a decision to just hope for the best. No one wants to pay their first month’s rent, move in, and discover that locals don’t frequent the area during their typical business hours.

Another good thing to check is how easy it is for cars to pull into the lot. Traffic can create natural restrictions for potential customers. For example, if a strip mall or building is located on a busy main thoroughfare but it’s far away from traffic lights, customers might have trouble stopping by. That can have a surprising (albeit indirect) impact on the company’s income.  

9. What’s the parking situation?

A building or strip mall can have just a few tenants and not have enough parking space for everyone at one time. If the strip mall or building has a relatively small parking lot and has one or more tenants, such as a beauty salon or dental group that serves multiple customers or houses a tenant with a lot of employees, the business and its customers may not always be able to find places to park.

The best way to tell is to check out the parking lot on different days and at different times of the day.

10. Who owns the building?

Establishing who owns the building is key. Is it an LLC, a large corporation, or a sole individual?

It’s more than just who the rent paid goes to. If the landlord isn’t local, it may be more difficult to resolve issues related to the building. Even when the business owner is located nearby, getting their attention is sometimes problematic.

If possible, check with some other tenants in the building to find out how quickly problems get resolved. Another option: Ask the landlord for contact information for former tenants of the space under consideration. Call them and ask about their experiences.

11. Are the terms of the lease clear?

Business leases are complicated documents. Technically, they’re legal contracts. Jack Levey, a real estate attorney at Plunkett Cooney in Columbus, Ohio, says, “Even terms that seem familiar may have a very different meaning in the lease than in everyday English.” That means terms like payment methods, late fees, pet policies (hey, who doesn’t want to bring their pet to work?), and beyond can all create confusion.

Every lease is written to protect the landlord’s interests, not the renter’s. But before signing a lease, any business owner is well within their rights to have their interests represented, too. It’s prudent for a business owner to have their attorney review the lease to see if any changes should be negotiated. They might even be able to offer more helpful tips that can make for an agreeable lease.

12. Are all promises in the lease?

Often, business owners will be able to negotiate for specific promises, such as extra parking spaces, access to amenities that typically aren’t included in the original agreement, or something else. Verbal promises from a landlord are a great starting point, but it’s wise to confirm that they’re written in the lease before signing. Written promises (and the subsequent signatures) are much more enforceable.

13. Can the business assign the lease, sublet the space, or even sell the business?

Strange question, but Levey advises business owners to remember that the landlord may have a say in that decision. “Most leases say that you need the landlord’s permission to assign the lease to someone else, or even to sublet the space. Many leases are even stricter and require you to get the landlord’s consent to sell the equity in your business or merge with another company.”  

These are important questions to answer, especially if the business wants to sell or lease to another person as their company grows.

14.  Is it possible to get an “out” clause written into the lease?

An “out” clause spells out the rules to follow if the business owner wants to get out of the lease. Maybe the company outgrows the space or it can’t continue to operate there. But “out” clauses aren’t always included by default. But if the business owner inquires about an “out” clause, the landlord might be willing to add a clause that allows the company to terminate the lease without penalty, provided the company gives them a certain amount of advance notice (usually at least three months). 

The Bottom Line

Business leases have a longer length and are more complicated than residential leases. Before signing, it’s wise for a business owner to get help from a real estate attorney. An ordinary realtor probably doesn’t have the knowledge to represent an owner’s interests in the contract negotiation, other than the basics like price and length. An attorney knows the right questions to ask, how to negotiate more favorable terms, and the ins and outs of the responsibilities of the landlord and the renter.

RELATED: How to Evaluate a Commercial Lease

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.