Most companies lease office space rather than own it because leasing is more cost-effective over a long period. Nevertheless, many businesses don’t take full advantage of potential savings because they don’t know how to maximize the office rental. This is why all businesses should have a real estate agent, a lawyer and an accountant all working in concert toward that singular goal.
1. Target the Budget
Determine a lease budget, and then determine suitable regions for the office’s location. With that information, a real estate agent can provide the business with tools to check out Serviced Offices HERE (or see MalaysianToday.com), in the appropriate locations and within established budget constraints.
2. Consider Virtual Office Space
The modern business can get a virtual office space that makes up for any shortcomings in the physical space. The need for a large conference room, for instance, can increase rental costs considerably, but if the company were to get a virtual office space, such as a video conferencing solution, they could meet that need with minimal expense.
3. Commit to a Longer Term
Rental costs for an office on a yearly basis are generally fixed; however, most office renters are willing to offer discounts on a yearly basis to renters who are willing to commit to a long term. Essentially, the renter saves on potential costs associated with renting a space and passes some or all of those savings onto the client.
Many companies make the mistake of waiting until the final year to renegotiate the lease. Office space leases can generally be renegotiated up to three years out. The benefit of doing so is that the client can get an even greater discount on the years remaining. The benefit for the rental company is that they secure a profit stream for an even longer period.
5. Consider Backloading
Often, a business does not have the cash flow to rent the office that it knows that it’ll need in the short term. This situation is common among startups, which have a lot of capital tied up in the launch. Since this is such a common scenario, most rental companies will agree to backloading the contract, which means that the client will pay less now but more later as its cash flow increases.
6. Consider Subleasing
Subleasing is an effective way for many businesses to afford additional amenities or achieve a particular location. Consider a scenario where an office space is nearly perfect except that it’s too large and too expensive. To overcome this, the company could divide the space, rent some of it and use that income to offset the cost.
7. Negotiate Incentives into the Contract
Common lease incentives include rent abatement and build-out allowances. These incentives must be negotiated into the contract, however, and will rarely be available by default. A real estate agent can provide tools to check out serviced offices that will accommodate those features.
8. Watch for Distressed Ownership
In the current economy, rental companies are failing at an alarming rate, and leasers are generally not protected. Therefore, it’s in a company’s best interest to enter into a lease agreement only with a rental company that is in good financial standing.