The Pros and Cons of Short-Term Office Leases

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.  

Disclaimer: The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Funding terms, qualifications, and product availability may vary and are subject to change without notice. Crestmont Capital does not guarantee approval, rates, or specific outcomes. For personalized information about your business funding options, contact our team directly.