If you are ready to lease a commercial space for your business, there are a few steps you must take to find the right property and get the most benefits out of it. Perhaps you a startup or in the early stages of your business so you are uncertain about the future of your business, so you are considering a short-term office lease. Read on to find out both the advantages and disadvantages of having a short-term office lease.
What Is a Short-Term Lease?
A short-term lease is a lease agreement that lasts for a duration of six months or less. They can be month-to-month leases or even weekly leases. You can also talk with your landlord to determine a term that works best for you.
On the other hand, a long-term lease has a fixed rent amount per year and a short-term lease has a fixed rent amount per week or month depending on the agreement.
Pros of a Short-Term Office Lease
There are several pros for signing a short-term lease agreement.
- Moving out is flexible – you have the flexibility of moving out of the space quickly if needed as long as you give proper notice ahead of time.
- Increase rent – the landlord can increase rent every time the lease is renewed as long as proper notice is given which depends on the area you live and the city laws.
- Change terms – changing the terms of the lease is easy to do.
- Fast process – short-term leases are less complex, so if you need to get access to space fast, it can be a good option.
- Free up working capital – your ability to borrow funds will be not as limited as with buying office space.
- More time – by leasing you will be able to focus on your business more.
There are also advantages for landlords. They can choose from a pool of renters when the lease ends and if there is high demand, they can increase the prices on the new leases and fill the space.
Cons of a Short-Term Office Lease
Although there are a few pros to signing a short-term lease agreement, it comes with its cons as well. Here are some of the common disadvantages you should consider before signing an agreement.
- High rent – landlords often charge higher rent because short-term leases are riskier. This is great for the landlords but not appealing for the tenant.
- Terminate lease – both parties are able to terminate the lease quickly. It can be stressful for either the landlord or the tenant. Landlords will have to quickly find a potential tenant for the space while the tenant will have to find a new space with very little notice.
- Change agreement terms – when it is time to renew the agreement, landlords can change the lease terms.
- No equity – when you lease you will be funding someone else with your payments.
How to Select Temporary Office Space
Consider these tips on selecting temporary office space before you sign a short-term lease agreement.
- Understand local laws – each area has different laws for short-term office leases.
- Familiarize yourself with the space – be sure to visit the property and check out the area. Be upfront about what your needs are when discussing the details and negotiating the lease agreement.
- Check security system – make sure the property is safe and secure for you and your employees.
- Work with an expert – it can be overwhelming to find the right office space you are looking for so consider consulting with an expert to help you with the process.
- Negotiate – negotiate the period of the lease.
- Create a backup plan – prepare ahead of time if you are not able to renew your lease. Find other options for office spaces before you are given a notice.
The Bottom Line
If you are considering signing up for short-term lease, be sure you know all the information beforehand. As you can see, there are both pros and cons to having a short-term lease so do your research and see if it is the best for you and your business.