Successfully negotiate the rental agreement for your new office space
- Thursday, February 20, 2020
When you decide to rent office space, you, as a tenant, make a commitment with the landlord through a rental agreement. Various provisions are included in this contract, such as the rent, the number of square meters of the office space, the rent-free period, and other special regulations. Nevertheless, you are always able to negotiate these provisions. You can easily make the rental agreement negotiation into a success by following these 6 steps from SKEPP!
1. Measure the office space before you start rental
After you have calculated how many square meters of office space you need, you can find the office space that meets your requirements faster. Make sure that you know whether your needs are based on GFA, GIA, NIA, and GLA. The Gross Floor Area (GFA), the Gross internal area (GIA), the Net internal area (NIA), and the Gross leasable area (GLA) are real estate terms that can make it difficult and confusing for you as a tenant. How many square meters of office space are you really going to rent? According to NEN2580, the standard for determining the floor area and size of a building, it is as follows:
- GFA | The total floor area inside the building envelope, including the external walls, and excluding the roof. Nevertheless, definitions of GFA vary around the world;
- GIA | The total floor area inside the building envelope, excluding the external walls;
- NIA | The actual occupied area. This type of area does not include walls, stairs, loading bays, accessways, parking spaces or any area occupied by machinery required for air conditioning, heating power supply or lifts;
- GLA | The amount of floor space in a commercial property that is available for rent. This area is designed for tenants to use exclusively and includes basements, mezzanines, or upper floors.
Make sure that you properly measure the space so that you know exactly how many m2 of office space you are renting. If the property offered is not in line with the real floor area of the office space, you can report this to the landlord and use this information during the rental agreement negotiations.
2. What is the term of the rental agreement?
Whereas it used to be that the minimum duration of a rental agreement was 5 years, it is now a trend to rent your office space flexibly. As a tenant, you can win a lot at this point. Nowadays, renting office space per month is often possible when it comes to renting a workplace. Though, a period of just 1 year is quite normal for a larger office space. Do you know for what period you are entering your rental agreement?
Flexible rental is particularly attractive for fast-growing organizations. In the future, you may fall short in the number of workplaces due to the great success of your company and the arrival of new talent. In order to easily rent a larger office space, it is very useful to not be tied to a rental agreement for too long. Besides, a rental agreement can always be extended!
3. Take advantage of the freedom to negotiate about the rental price
Many people think that the stated rental prices are fixed, but this is not true. You can always negotiate about the rental price when drawing up the rental conditions. Especially when you are going to rent a larger surface, you will have a strong position during the negotiations of the rental price. Even with smaller office buildings, the savings can increase considerably. So always try to negotiate the indicated rental price, because there is often still room for the landlord to decrease the rent.
Take advantage of this freedom of negotiation! It is also possible that no taxes are charged on the rented office space. Sometimes it can, therefore, be cheaper to make an appointment with the landlord about rented VAT. You can then deduct the rent to be paid as input tax. Collect information about this beforehand, because you might be able to save a lot on the rental price in this way.
4. Do you have an all-in rental price or are the service costs not included?
In many office concepts, there is an all-in rental price but the service costs are not always included in the rental price. In addition to the basic rent, an amount per m2 is then charged for, among others, the use of gas/water/electricity. This often includes cleaning services and possibly the use of the internet and telephone. Therefore, pay attention to the service costs and what services are included. Calculate this in advance so that you are prepared for the total costs. If you are wondering whether the service costs are too high, talk to the landlord about it and see what the possibilities are.
5. Go for the highest possible rental discount
An important negotiating point is obtaining a discount on the rental price of your office space. Try to get a rental discount during the negotiations or maybe even a rental-free period. If this is not feasible, there are other options, such as ingrowing rent. There is a lot to be gained by getting a discount.
For example, sometimes a rent-free period is given at the start of the rental agreement, which means that you do not pay rent to the landlord during the first agreed time period. This period is usually a few months. You can take advantage of this by ensuring that this period is as long as possible. Nevertheless, it is important that you make sure that the rent does not exceed the current market price after this period. Since this would mean that your benefit will be lost again.
The rent-free period does not always occur in practice, certainly not when there is a flexible rental term. That is why options are also used, such as a rental discount or an ingrowing rent. A rental discount on the office space means that you rent the first (X number) month(s) with a certain percentage discount. The ingrowing rent means that the rent increases a little every X number of months. Therefore, look carefully at what is possible in consultation with the landlord.
6. Do not unnecessarily pay too much for the facilities in the office building
Will you rent the office space unfurnished, with carpeted floors or are the necessary partitions already placed? A lower rental price is of little value if you still have to take care of the painting, installation of air conditioning and other matters that are normally the responsibility of the landlord. Therefore, it can sometimes be the case that renting a ‘complete’ office space is cheaper. It is sometimes even possible to rent a furnished office space. Make sure that you negotiate all these matters when drawing up the rental conditions.
Start by negotiating the rental conditions for your office space
Now that you have completed these steps, you have probably passed the negotiation successfully. Do you still have additional questions after reading this article? Then contact one of our real estate consultants. They are always ready to answer all your questions about the negotiation of the rental conditions and all other questions regarding renting office space.