Business owners looking at leasing their first office space often find the process overwhelming. The good news is, SWING is here to help. Read through our First Lease Frequently Asked Questions to get an idea of what you’re in for. Then, contact us so we can match you up to your perfect property.

First Lease Frequently Asked Questions

The first and most important thing to know about a commercial property lease is that it’s just a starting place for negotiating. Everything in a lease is negotiable.

Do landlords require personal guaranties?

Most likely yes. Requiring a personal guarantee from the business owner is very prevalent because of market now. Before you commit to a lease of any length, ask yourself: Are you confident in your industry and your ability to pay your bills? If you are, then a personal guarantee is not a big deal. If you’re not confident in your business, perhaps office space is not what you need right now.

Can I make alterations or improvements to the space?

Different property owners have different policies, so make sure you ask this up-front. Is the setup of the space the way you want it, or will you need walls moved or removed? What about windows? Is the flooring the right material? How about aesthetics, such as wall colors? If you’re going to make changes, what changes will the landlord pay for, and which will you pay for?

Think about the kind of business you run as well. Technology often requires physical alterations as well: outlets, networking, and so on. What are your phone requirements? What about your future plans? Consider your expansion plans– you really must be allowed to make alterations if your business is going to grow.

Can the landlord really relocate me?

Some leases allow the landlord to relocate your space somewhere in the same building. If you’re a small tenant, a bigger tenant might bump you! These terms won’t be hidden but they might be easy to overlook. If the landlord can move you, make sure the landlord incurs the costs of the move.

What’s included in my lease?

While you’re reviewing an initial lease offer, identify costs and expenses of the leased space that are not included in the lease. Here’s a list of what you may have to pay for that is not included in your lease: common area costs, operating expenses, capital improvement, management fees, trash removal, and security deposit. If your lease requires you deal with subcontractors specified by the landlord (for tenant improvements or telecommunications, for example), realize those costs may also be higher than if you were to hire for those services yourself.

Some types of lease are all-inclusive, such as a full-service lease or a triple-net lease. If you don’t want to bother with the minutiae of your lease, consider this approach.

Utilities are often included in a lease. The big utility bill, especially in Arizona, is going to be your electricity. In a full-service lease, the building will be open 7 a.m. to 6 p.m. weekdays, and more restricted hours on the weekend. While you’re operating during those hours, you won’t have any additional charge. But if you have a 24/7 operation, your off-hour electricity rates could be sky-high. Look at and agree on a rate you can handle on the business’s off-hours, or you risk getting zinged.

If I’m not using all the space I’m leasing, can I sublet some of it?

Maybe! Remember, everything is negotiable. If you have a buddy you want to sublet some of your excess space to, build that into the lease. A landlord probably won’t have a problem with it, if you’re the sole point of contact. He should have reassurance he can go after you for the whole space, not your sublet client.

How am I protected if the building is damaged or destroyed? Is the landlord liable for damages?

The landlord will require you have your own insurance.

How do I choose property that’s right for my business?

Identify the prerequisites of the space you need to lease: location, square footage, parking, and other critical factors like onsite security, upkeep, and common areas. Try to have a firm grasp about your future expansion needs, or the possibility of your business not working out the way you envisioned it. Unrealistic optimism can lead to you overextending yourself.

How long a lease should I sign?

Consider a one year lease with the option to renew, rather than a 2+ year lease. If you grow faster than expected, you’ll have freedom to move. Certain businesses can maintain at a location and a specific size for years: doctors, for example. Others need to be flexible both in leased size and location.

Can a landlord raise my rent after I’ve signed the contract?

In the contract, negotiate stipulations about how often landlords can raise rent, and by how much. Knowing the area helps: an expert, like SWING Real Estate, will know if your rate is comparable to what neighboring businesses are paying, and how popular your desired property is. The less popular the property, the more leverage you’ll have.

Still Have Questions?

We're here to answer them! Contact us any time to talk more about leasing North Scottsdale commercial space for your business.