This post originally appeared on tBL member Troy Golden's blog Golden Group CRE Blog and is republished with permission. Find out how to syndicate your content with theBrokerList.

Review the Demised Premises Section of Your Commercial Office Lease

Your commercial office lease should contain a section which describes in detail the premises conveyed in your leasehold interest.  As the office tenant, you want to obtain the exact size of office space needed, improved as closely as possible to accommodate your use, with the fewest restraints to overall operations.  The landlord’s objective is to convey occupancy to the office tenant while maintaining the highest degree of control over the property.

The exact size, address, and list of office tenant improvements existing, or, to be provided by the landlord, should be specified in detail.  An exhibit and/or schedule should be used to outline the space on a site map and/or floor plan so the parties can visualize where the premises are located within the building or complex.  Don’t be afraid to insist that this be done accurately.

Rentable Square Feet vs. Useable Square Feet in Your Commercial Office Lease

Unless the office tenant occupies the whole floor, entries, hallway, stairways, elevators, and restroom areas are not directly rentable space.  In order to allocate non-rentable space among all the tenants, a “load factor” is computed by dividing the net rentable area of the building by the gross floor area of the building, then subtracting the result from 100%.

Review Tenant Improvements in Your Commercial Office Lease

If existing interior improvements are extensive, they should be listed carefully on a separate schedule, and the condition of major components noted.  This is important to ensure that the office tenant gets what he bargained for at commencement, and could become important upon termination of the lease under the “surrender” provision.

If interior improvements are to be constructed, the regulations governing their construction are generally spelled out in the “Alterations & Repairs” provision.  If this is the case, it should be stated in sufficient detail to clarify the understanding of the parties, including:

  • The initial condition of the premises when delivered to the tenant
  • Which party is responsible for creating plans and specifications, and for obtaining building permits
  • Which party is responsible for paying for the work, and how much
  • Construction schedules, and penalties for delay.

Office tenants should retain a tenant representation broker to help at all stages of the site selection and lease negotiation process.  At Golden Group Real Estate, we specialize in tenant representation real estate services for office space users in the Chicago area, helping local business owners find office space and negotiate lease and purchase agreements. We never represent landlords, so we are prepared to negotiate aggressively on behalf of our tenant clients.

For more on Golden Group Real Estate, read about our real estate services.  Let us know if we can help you find office space for rent or buildings for sale.  Call us at (630) 805-2463, email us at [email protected].


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