Finding a retail space or office for rent in Sathorn (also known as ออฟฟิศให้เช่าสาทร) is no joke, since your business’s reputation and workflow are at stake. Even in the best location, a commercial lease can be problematic if you’re not extra careful in checking the terms and conditions before you sign on the dotted line. You must ensure the property you rent aligns with your business needs while safeguarding your finances.
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Critical Terms to Note When Reviewing a Lease
More often than not, you skip reading a contract because of the jargon you don’t understand. But there are specifics in a commercial lease you must never skip.
- Length of Lease: Are you renting short-term, long-term or flexible terms? Check into the rates and whether the lease length offers business stability. It might be problematic if you have to relocate every year or so.
- Security Deposit: How much is it, and what is required for its full return?
- Rent: Don’t focus on the monthly fees alone, but also check on the increase or escalation terms. Go further by asking for the computation method so everything is clear-cut.
- Inclusions: Does the rent cover insurance, maintenance, property taxes and the like?
- Space Inclusions: If you’re renting an office within an entire building of office rentals, which shared areas are you paying for or separately with the rent, should you choose to use them?
- Tenant Responsibilities: If build-outs or improvements are required, who will pay for them? What about maintenance, insurance, and other fees?
- Renewal: Check the renewal terms, especially with regard to rental increase and changes in inclusions. With a property in a strategic location, you might want to ensure that your landlord first discusses lease renewal with you before offering it to other potential tenants.
- Lease Termination: In the event of an early termination, what penalties will be imposed, if any?
- Subleasing: If the situation calls for it, is the landlord open to discussing sub-leasing the space?
- Disputes: Find out whether disagreements, if they come up, go straight to court or open for mediation or arbitration first.
What to Avoid When Leasing Commercial Space
Now that you know some specifics you should look for, you can easily list down questions to ask before renting in Thailand or other location, for that matter. This will help you steer clear of potential headaches.
How much is the total lease cost?
As previously mentioned, you don’t stop at knowing the rental fee.
- Look into whether the base rent is the same as the total occupancy cost.
- Check what’s included or excluded in the basic monthly rent, such as utilities and maintenance. This way, you’ll know if you’re getting the best rate or hurting your bottom line.
- Take into account if the landlord imposes fees for maintaining common areas. You might be slapped with a separate fee for parking and security, which can add to your financial burden.
- Make sure to check all leasing charges to protect your business’s fiscal health.
How long is the lease for?
This is where you decide to rent in the short-term, long-term or something more flexible.
- Short-term is best if you’re just starting and you’ve yet to find out how your business will perform. This gives you the flexibility to terminate or extend a lease based on changes in your company or operation.
- If your business isn’t location-specific and there are plenty of commercial rentals available, short-term offers a good option.
- Long-term lease, especially paired with a fixed rental fee, is great if you prefer to stay in one place for a predictable period. It’s also easier to negotiate long-term leases than short-term ones.
- If you’re unsure how your business will fare in a year or four years, consider negotiating flexible lease terms. For example, you start off with a short-term lease that you can renew for two or three years. Make sure to check the possible rental increase with every renewal.
What lease options are available?
Each option has pros and cons, which might make you mull over renting versus buying office space.
- Gross Lease: You pay a flat monthly fee, while all other operating expenses, such as maintenance and repairs, are handled by the landlord.
- Neat Lease: You pay for the base rent and a few additions, such as property tax.
- Percentage Lease: Usually applicable to retailers or tenants of a multi-tenant property, you pay a fixed rental and a certain percentage of your shop’s gross income.
- Net-Net Lease: On top of the base rent, you’ll also pay for insurance and taxes.
- Triple Net Lease: All operating building costs are passed on to you.
What escalation clauses are included in the lease contract?
An escalation clause is added to the lease agreement to protect landlords from changes in the real estate market. You’re not just looking into a rent increase upon renewal but also other factors.
- Rent automatically increases based on certain market metrics, such as the Consumer Price Index.
- Rent is regularly increased over the lease period.
- Pro-rated adjustments in direct costs, such as heating and taxes.
In addition, you should also ask how your business is protected if and when a landlord goes bankrupt or the property is foreclosed. At the very least, your lease must specify that your operation will continue under such circumstances. For your peace of mind, rent an office with IW Office, a trusted provider of serviced offices in Sathorn.
