The Small Business Times

Leasing An Office For Small Business: Pros vs. Cons

An office space allows your team to work and grow your company while learning from each other.

While owning an office space can be costly for a small business, renting is a great option.

Here are the pros and cons of leasing an office to help you decide if it’s worth it. 

Pros Of Renting An Office Space

Here are some benefits of renting office space.

1. Capital

Leasing offers the advantage of not tying up your capital. While equity gains can be appealing, having available cash makes it easier to seize opportunities and secure loans.

This flexibility is particularly beneficial if your business is considering new ventures. If you’re looking in Maryland, here is a place that offers office space for rent

2. Move Offices Easily

Leasing provides the flexibility to change locations quickly, which is essential for start-ups and growing businesses.

As your business expands, you can easily move to a larger space.  Depending on your industry and business type, selecting a commercial office space for lease in an appealing location can attract new talent, fostering business growth.

Additionally, an aesthetically pleasing office can draw in new clients and convey a sense of professionalism and credibility.

3. Low Maintenance 

A building housing multiple tenants typically handles hiring cleaning personnel and maintaining shared areas, helping you reduce maintenance costs.

This is desirable if your business operates on a limited budget and cannot afford maintenance staff.

However, carefully reviewing the lease agreement to understand who is responsible for repairs to avoid unexpected costs.

Cons Of Renting An Office Space

While it offers many benefits, renting an office space has some cons. 

Landlord Permission 

In most leased spaces, the landlord must approve any building changes.

Most landlords of business premises allow for redecoration, hanging pictures and signage, and changing fittings, but it’s essential to check with the landlord before signing the lease agreement.

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Increasing Rent

Another drawback is the potential for fluctuating rent charges. Annual rent increases can impact your profit margins.

While relocating is an option if rent becomes too costly, the expenses associated with moving, such as increased staff hours, fees for transferring supplier contracts, cleaning costs, and purchasing new furniture, may outweigh the benefits of slightly lower payments elsewhere. 

Factors To Consider Before Signing Your Leasing Contract

If you’ve decided to rent an office space, consider these factors before committing.

1. Find The Type Of Office You Need

Office spaces come in various types, catering to the diverse needs of entrepreneurs. These include shared coworking spaces, traditional private offices, and more.

You should look for an office that caters to your and your employee’s needs. 

  • Access pass: By buying an access pass, you can reserve a private office for a day. This pass usually includes access to the lounge and all amenities on the day of use. It’s ideal for those who only require office space occasionally.
  • Office suite: This is best suited for entrepreneurs seeking dedicated, collaborative,  and individual spaces for their growing team. These suites can be customized to reflect the brand and support specific user needs, often featuring dedicated kitchens and private entrances.
  • Private office: Designed for individuals or teams of up to 15, private offices provide ample room to expand and adapt. This option is suitable for you if you’re a new team, expanding your business, a freelancer, or starting out.

2. Dilapidations And Casualty Costs 

Dilapidations are alterations to the premise you made outside the lease covenants, which can be costly.

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Before signing, make sure the dilapidations clause in the lease does not require you to do severe restoration or repair of the property.

Casualty costs, such as those from earthquakes or natural disasters, should not be the tenant’s responsibility to pay. Ensure your lease protects you from paying rent for unusable space due to such damages.

3. Service Charges

Service charges, which cover maintenance of shared premises, can be vague. To avoid surprises, ask your landlord to list the inclusions in service charges for auditing.

Look for exclusions from your operating expenses, such as property executive salaries, consultation and advertising costs, commissions, initial landscaping, structural replacements, tax penalties, increased interest charges, legal fees, and excessive contractor fees due to unique relationships.

Landlords are responsible for structural installations and modifications, while tenants cover repair costs.

Be cautious of landlords who try to charge for replacing old HVAC systems or plumbing, as this should be considered a repair, not a capital improvement.

4. Reviews

Landlords often conduct rent reviews to assess the market and potentially increase rental rates.

Consider asking your landlord if they plan on increasing the rent before accepting their suggested rate. 

Endnote

Leasing office space is an excellent option for small business owners who can’t afford to buy property.

It comes with multiple benefits, like allowing you to save capital to invest in growing your business, the ability to change offices easily, and lower maintenance costs than owning an office.

However, it has disadvantages, like getting your landlord’s permission before making changes and the danger of a rent increase. Properly read your contract and clauses before signing the lease for your rented office space.