99ACRES: What to check before leasing an Office Space?
While searching for the right office space, you need to make sure it fits your particular requirements and budget without compromising on the quality and extent of the facilities provided. Make sure to adhere to the following points to land a deal that is best suited to your needs.
Looking for an office space while setting up a new business or expanding the current business can be highly taxing and frustrating if you are not aware of what you should keep an eye out for.
Business requirement or budget
This is the single most important thing you must decide before you start looking. What is more important for you? Is it your requirement of certain specifications or the amount of monthly budget that you would like to deploy? In a typical scenario, the business requirement has to be a priority and an optimum budget has to be allocated for it. So start creating the foundations of a business, only if you have the resources to fund it. If your office doesn’t fit your business requirement, soon you would have to switch office, which would incur additional costs.
Choose the right broker
A broker facilitates the transaction for you if you know how to handle them. Instead of a 'No Broker' or a 'Zero Brokerage Firm', look out for a broker who is skilled enough to get you the best deal and reduce your pains in the long term. A good broker will have larger inventory assortment and will be familiar with the top landlords through multiple transactions. Talk to five brokers but choose one or max two brokers to look out for you. This will allow the broker to innovate so that you the space that suits your needs. Choose a broker who has a prominent digital footprint because he would be afraid of bad reviews and will deliver as per your expectation. A conventional broker would not be committed to delivering post transaction support.
State of furnishing
If you are looking for a ready-to-move (RTM) office, a lessor would typically refurbish with a whitewash, repair the furniture and fittings. While negotiating the transaction, keep a checklist for everything and you may also demand additional requirements along the process of furnishing. If you are negotiating on an 'as is where is' (AIWI) basis, please factor in costs to refurbish and maintain. While, an AIWI office will look appealing in commercial terms, beware of the headaches that will follow soon. So it is always better to ask for a refurbished office in ready condition. Look out for the ACs that might have rotted from inside, you may ask for the AMC copies. Look out for the condition of Data/Voice/Electrical Cabling – that can cost you a bomb later.
It is always good to know the forthcoming recurring costs that are apparent or hidden. For example, if it is an existing office, you must ask for the electricity and maintenance bills. If you scrutinize it, you will be able to discover the inherent costs of operating that office. If there is a maintenance charge, you should know the components of such charges in detail. Typically, in business parks, if the maintenance charges include chiller running costs, you should know whether it also includes the AHU running costs or not. Power back up charges may be a significant cost to note as well.
Coverage of damages
Typically, normal wear and tear conditions are accepted by lessors. However, any significant damage to furniture and fixtures is the responsibility of the tenant. Sometimes, a clause in the agreement that spells out how to manage the equipment is obscure and in case of any damage becomes a cause of dispute. For example, when you are taking a used office with AC, and AC compressors stop functioning after some time, you should incorporate a clause to protect you from such incidences.
Lastly, the exit clause has to be very carefully drafted. When you take a new office, you are always bullish about the stability of your venture or company but if it turns sour and does not happen the way you have anticipated, the exit clause should be drafted in a way to protect you from massive damages. A typical lock-in period will have a clause for you to compensate the lessor for the unexpired period of the rental.