Effective Legal Resolutions, Done Efficiently

Tips for negotiating a California office lease agreement

On Behalf of | Oct 19, 2023 | Commercial Real Estate

Negotiating a California office lease agreement requires skill. You might even feel overwhelmed when looking for the best office space for your business, since the terms and space you accept will affect your business for years. There are ways you can increase your chances of negotiating a fair deal.

Play it cool

Avoid showing your excitement when negotiating for any commercial real estate. Showing how much you want a space puts you in a position of weakness. If the property owner knows how much you want the space, the owner may use that desire against you.

You don’t want to do anything that gives the property owner the upper hand. If you’re too eager to get the space, the owner might demand high rent, rental terms and other details that are unfair or not in your best interest.

Research local commercial real estate

Rates are all over the place for commercial real estate in California. The location, size and condition of the space affects the value. By learning about the local commercial real estate market, you can negotiate your office lease from a position of power.

Commercial property is either class A, class B or class C. In 2022, the average California office rents for class A was $59.32 per square foot. The average for B was $37.75 per square foot and C was $25.55 per square foot.

Try to get the most recent commercial real estate data for your area. This will give you an idea about what other business owners in your area are paying for office space.

Understand the terms of the lease

Never sign a lease if you don’t know or understand the terms. Signing a lease without reading it is a mistake that can get you into a dire situation. For example, you might read the lease and discover it has a restore clause. The restore clause means you restore the space to its original condition when your lease ends.

Agreeing to the clause means you’re legally responsible for repairing or replacing anything not as it was when you moved into the office. You might not want this clause, but if you signed the real estate lease, it means you consented.

Negotiating a commercial office lease agreement is a challenge. You want to get the best deal possible, but the property owner also wants to get the best deal. If negotiating makes you uncomfortable, you might consider getting help from someone who is good at negotiating real estate deals.