Office Lease Cost

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How much does an office lease cost? Commercial property owners who want to lease their space to a business needing office space may ask this question. Let’s explore this question and review some general information about office leases and why they are important.

How Much Does an Office Lease Cost?

An office lease is a commercial lease executed between a commercial property owner and a tenant who needs office space to run a business. It is common for business owners to rent office space rather than purchase real estate to cut down on startup and operating costs.

Some examples of businesses that may rent office space and require an office lease include:

  • Lawyers
  • Doctors
  • Dentists
  • Real estate agents
  • Tech companies
  • Accountants

There are several different types of office leases. Each type of lease dictates the various roles and responsibilities of each party. As a result, office leases can get complicated, so it is highly recommended that a property owner hires a real estate attorney to draft their agreement.

An experienced attorney will know what clauses and information must be included in the office lease to ensure that it protects both parties and is legally enforceable. Depending on the property's location, different state and local laws can affect the office lease agreement and how it must be executed.

Based on ContractsCounsel's marketplace data, the average cost of an office lease is $507.22.

What's Typically Included in an Office Lease

The details of each office lease will vary based on the parties and the type of lease being used. However, the following key terms should be included in all office leases:

  • Cost of rent. The office lease agreement should detail the monthly rent rate so the tenant knows that they must pay the landlord each month. In addition, the lease should lay out what the rent covers, what expenses must be paid by the tenant (like utilities or insurance) and when the rent is due.
  • Rent increases. It is common for commercial leases to increase rent throughout the duration of the rental agreement. This needs to be included in the agreement. Many tenants will negotiate a rent cap.
  • Security deposit. Landlords can include a security deposit agreement in their office lease. However, they must consist of the amount and how the tenant will get the deposit back pending inspection at the end of the lease.
  • Duration of the Lease. Office lease agreements tend to have longer durations than residential lease agreements. While many leases have a one-year commitment, it isn’t uncommon to see an office lease of three to five years.
  • Additional expenses. Depending on the type of lease, the parties will have to determine who is responsible for utilities, property taxes, property insurance, maintenance, repairs, and other services like snow removal or landscaping.
  • Property description. An office lease needs to describe the property in detail. For example, some buildings may have additional office space rented to other tenants or bathrooms and shared areas. A clear description of the property will allow the tenant to know which areas they can access.
  • Use clause. Defines how a tenant can use the property for their business. This clause protects the landlord and their property from damage and liability.
  • Exclusivity clause. If the office space is part of a larger building with offices rented out to other tenants, an exclusivity clause or exclusivity agreement prevents the landlord from renting space to a competitor of the tenant’s business.
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Types of Office Leases

An office lease is a commercial lease, and several types of commercial leases can be executed. Each lease determines who pays additional expenses and each party's different roles and responsibilities.

The most common types of commercial leases include:

  • Net lease. A net lease requires the tenant to pay property taxes in addition to the property's monthly rent.
  • Double net lease. Under a double net lease, the tenant pays for property taxes, property insurance, and the monthly rent.
  • Triple net lease. Under a triple net lease, the tenant pays for property taxes, property insurance, regular maintenance, and rent.
  • Percentage lease. Under a percentage lease, the tenant pays a base rent amount and a percentage of their business revenue.
  • Gross lease. Under a gross lease, the tenant pays a monthly rent, and all utilities and all other services are included.

An office lease should always state the type of lease used, how rent and expenses should be paid, due dates, and penalties for overdue payments.

Examples of Office Lease Projects

Office Lease Drafting Services

A property owner needing an office lease should always contact a real estate lawyer for drafting services. After an initial consultation which allows the landlord to express what kind of lease agreement they need, the lawyer will draft an office lease to fit the landlord's specifications.

An office lease is an especially important contract in commercial real estate. This agreement must be drafted correctly to protect the rights of the landlord and tenant doing business at the location. A knowledgeable real estate lawyer will know what clauses should be included in the office lease.

Office Lease Review Services

Both landlords and tenants may require lawyer contract review services. For example, many landlords attempt to draft their office lease agreement to save money on legal fees. While this is possible, they should always have a lawyer review the agreement to check for mistakes before it is used.

Tenants who are faced with signing an office lease are encouraged to hire their attorney to review the agreement. Office lease agreements are often long-term commitments that can affect a tenant’s business. Therefore, it is important that the lease is fair and includes all necessary protections for the tenant.

Office Lease Drafting Cost

Drafting an office lease agreement can be lengthy, especially if negotiations are being made during the drafting process.

According to ContractsCounsel's marketplace data, the average office lease drafting costs are $600.00 across all states.

Office Lease Review Cost

If a landlord or tenant needs a lease reviewed before signing, they can hire an attorney for review services. However, document review requires a licensed attorney’s legal expertise, so the client must pay for these services.

ContractsCounsel's marketplace data shows that the average office lease review costs are $495.63 across all states.

How Do Lawyers Charge for an Office Lease?

Hourly Rates for Office Leases

It is common for real estate lawyers to charge clients an hourly rate for legal services. Under an hourly rate fee agreement, the lawyer will charge the client a set rate for each hour of work spent on a project. The client agrees to pay that rate for however long the lawyer takes to complete the job.

The marketplace data for ContractsCounsel shows that the average hourly rate for a real estate lawyer ranges from $200 - $400 per hour.

Flat Fee Rates for Office Leases

If a lawyer doesn’t want to charge a client an hourly rate, another popular fee agreement structure is a flat fee rate. This is a more straightforward fee structure in which an attorney quotes the client a total, inclusive fee for legal services.

Attorneys benefit from this fee agreement because they will be paid a lump sum for legal services. The client benefits from knowing exactly what they need to budget for legal fees and no surprise bills at the end of representation.

ContractsCounsel's marketplace data shows that the average flat fee rate for an office lease is $507.22.

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