Leasing Office Space Part 15 Of 23 Lease Negotiations

When do You Start Paying for Office Space?

Tenants are generally provided time to prepare the office space for occupancy prior to the date when they must begin paying rent. However, in hot markets and for some very desirable properties or spaces, landlords will be able to require that tenants pay for office space beginning at the time the lease is executed. In such cases, it is possible the tenant will pay for space for four to 12 months, or even longer, prior to commencing operations within the office space. However, this is the exception rather than the rule. In most cases, tenants are provided a reasonable amount of time to prepare the space for occupancy.

What Happens if Office Space is Not Ready on Time?

The lease should address the contingency regarding what happens if it is not possible to occupy the office space on the contemplated date. For example, there could be delays in obtaining signage permits, usage permits, construction permits, and in completing construction due to a union strike.

TI Details

If the landlord is providing a tenant improvement (TI) allowance, what are the mechanics of performing the construction and funding the cost of construction? If the cost of the construction is less than the TI allowance, is the tenant allowed to keep the excess funds? Is union labor required?

More TI Details

Is the tenant required to use a general contractor? Should the landlord be compensated for inspecting construction? Alternatively, is the landlord required to provide space which complies with an agreed-upon set of plans at its own expense?

ADA Compliance Expenses

If the space is not currently ADA compliant, who should pay for the cost of making it ADA compliant?

The Market Research and Consulting division of OConnor & Associates provides information necessary to make decision to commercial real estate professionals. Occupancy and Rental Data, ownership and management information are routinely gathered for four major land uses - multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance. In addition the data is useful to brokers who for example continually monitor Houston retail space leasing, Houston office space leasing, Houston industrial space leasing, Houston apartments, Dallas apartments, Ft. Worth apartments, Austin apartments, and San Antonio apartments.

by: Pat O Connor

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