01625 588 200
04.04.2012
Commercial Property Leasing: A Simple Guide
Author
dawndev

Finding a suitable office space to operate out of is somethingthat many businesses will have to go through. The prospect ofleasing an office can seem daunting, but it doesn’t have to be.Here’s a guide to some of the jargon used in the commercialproperty world from Orbit Developments.

Heads of terms
‘Heads of terms’ is the document that confirms the mainpoints of the licence or lease document, this formalises anyprevious discussions or e-mails in one document before goingforward. As a rule of thumb, the longer the commitment, the betterthe deal is likely to be.   

Conventional lease
Most commercial property is let on a ‘conventional lease’basis. This means a full lease is negotiated between both partieswith the use of solicitors. Conventional leases are usually usedfor tenancies over 12 months – often for periods of up to 25 years- sometimes the landlord will give an option to ‘break’ the leaseat a given time. Leases tend to be used for larger areas of spaceand usually include incentives based on the commitment and covenantfinancial strength of the proposed tenant.

Licence
Usually, a serviced or managed office tenancy will bedocumented on a shorter form of agreement called a ‘licence’.Licences are worded in a user-friendly way that avoids the need forlegal advice, enabling a tenant to occupy the premises in a quickermanner in a kind of easy in – easy out agreement.

Managed or all inclusive office suites caterfor small and medium-sized companies who wish to provide their ownIT and telecoms equipment, rather than rent it and they didn’t needfull secretarial back-up. The all inclusive rate usually means therental, service charge, business rates, building insurance andquite often the electricity is included within the quoted price.These types of offices often suit companies looking for 12 monthcontracts or longer and rents are usually paid monthly rather thanquarterly. This is the most popular route for a new start upbusiness or partnership.

Serviced offices usually cater for a smallernumber of employees. They’re a good, flexible option for start-upsor smaller businesses as they are fully furnished and provideadditional services, such as trained reception staff, phone and ITequipment, within the monthly rental rate. Generally, the monthlyrent includes property with items such as business rates, servicecharge and utilities. The minimum term for this type of space canbe as low as three months. 

In summary, don’t be afraid of renting a commercial property,it’s easier than is seems and any good landlord will guide youthrough the various stages and processes.

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