Leasing an office space is a convenient approach to starting a business with a low start-up cost. Though it helps shorten the route to becoming successful in the business world, there are a few important things to learn to make the most out of a lease.

Unlike renting a house, leasing commercial real estate property is a bit more technical and involves terms and agreements that can be confusing for a first time tenant. Without understanding the common terms and agreement, it could wind up costing more on the tenant’s part. To avoid such a scenario, here are some of the common elements involved in a commercial lease to learn.

• Rent Escalation – The rent payment is bound to increase over the lifetime of the lease. Most people use the Consumer Price Index or CPI as the basis for the additional cost. Such an increase is relatively acceptable; commercial property that does not apply such a practice is pretty rare. To protect the tenant’s interest, it is advisable to negotiate with the landlord to withhold the CPI rent increase for at least 2 years at the beginning of the rental contract. Then, as much as possible, negotiate to put a cap on each year’s increase or better yet, negotiate for a predetermined fixed increase.

• Tenant Improvements - When leasing an office space, any renter will eventually require improvements of the office space. Be certain that the contract terms and agreement includes a clause that would allow tenants to make such improvements and alterations as needed. When such a clause is included, it may also come with an additional clause that would require the renter to restore any alteration or improvements done to the property to its original condition at the end of the lease term. A possible exception to that clause would be the addition of an alternative clause that requires approval by the owner of any such changes; that scenario usually allows any approved changes to remain at the conclusion of the lease term.

• Assignment and Subletting – Assignment and subletting clauses give the renter the right to sublease a portion or the entire rentable space to another party with the property owner’s permission. If subletting is profitable, the tenant and the property owner will split the revenue 50-50. Having such a clause is also convenient in scenarios when the tenant fails to fulfill the terms of the contract. A reassignment clause included in the terms and agreements of the contract relieves the tenant from being obligated to complete the lease or pay damages to the property owner to cover the remaining unused portion of the term. With an assignment clause in place, the exiting renter can look for another renter to take over the contract so it is not breached.

• Permitted Premises Use – An office lease normally has a section that outlines the permitted use of the leased space. For the tenant’s interest, it is advisable to have the clause be as broad as possible so if the time comes when the need to diversify the business arises – or if subleasing the space to another company with a different type of business - the tenant will not have a problem regarding the usage of the office space.

When negotiating the terms of a commercial office space lease, always keep in mind that the property owner still has the right to not approve the terms being presented, so approach anything like this in a friendly fashion. If the property owner is being unreasonable about any of your requirements, cease negotiations and look for another location. If unsure about any of the terms and agreements in a commercial lease, seek the services of a professional realtor. They will certainly know what should be included in the lease as they are well-versed in such topics and can handle any of the negotiations process for the tenant!