5 Common Mistakes You Shouldn’t Make in Renting Office Space
Finding and renting an office space is no easy feat for many who are not well versed with the processes or familiar with the office rental market in Singapore. We have narrowed down the 5 most common mistakes that people make in the process of renting an office space in Singapore. If you are able to learn how to recognize and avoid these mistakes, you will save yourself a lot of trouble and money.
Avoid These Common Mistakes when you are renting office space in Singapore:
1. Poor Planning for your Office Space
Before embarking on the search, it is crucial to assess current and future business needs with key business stakeholders. Office space is often overlooked as a mere company address. However, in reality, it should align with the business goals, such as team growth, company acquisitions, etc, over the next few years, which constitutes the Lease Period (download our free guide: Renting an office in Singapore, the essential you need to know). Do allow for sufficient time to plan, as you firm up the following important office search requirements:
Lease an office space that could accommodate your business growth in the future. Unsure how much square footage you need? Check the floor-size required based on your headcount here.
Include open space for discussions, meeting rooms, collaborative space, etc. This could potentially be used for future densification within the allowable capacity.
You could consider adding the ‘Right of First Refusal’ term for adjacent office units unto the Tenancy Agreement, giving you the option to expand your current office space when the need arises. Right of First Refusal (ROFR); a term that gives a specific party the right to be the first allowed, to lease a particular space when it’s offered for rent.
Location is a significant cost driver for real estate space, yet it is also a key component in attracting quality talent and clientele. Being close to your clients might help to improve business relations, and the same goes for being close to the right talent.
When your clients are able to meet in-person with you at your business location, this improves daily communication and furthers relationships.
Office Renovation & Your Budget
Setting a realistic budget will help to manage your expectations and cash-flows. It will help you make important and beneficial decisions in the office renting process.
Having a realistic budget helps with: upfront capital for the Security Deposit, renovation works, procurement of furniture, or ongoing expenditures such as office rent, utility, and maintenance fees.
During site viewings, the office conditions (ie. power outlets, air-conditioning system, flooring) will help to determine the cost of renovation.
2. Not Catering Enough Time to Searching, Renovating, and Moving
One of the more important aspects of a search for office space is committing your time. By allocating sufficient time, you would be able to see greater and more positive outcomes. This is due to the fact that you would be able to review more options, discuss with the Real Estate Advisor and therefore make more informed decisions. Do not make the mistake of rushing the office rental process!
It takes time to search, inspect and negotiate an office lease. Even after securing a space, many business owners make the mistake of underestimating the time needed to engage a designer for renovation works.
Avoid the last-minute rush by putting forth a sufficient amount of time. You can organize a timeline to manage expectations and tasks to prevent inconveniences in the long run.
3. Not Engaging the Right Professionals
By not engaging the right professionals, finding suitable office space can be very challenging. Qualified real estate professionals are here to assist you with the office rental process.
A tenant representative advisor assists companies and organizations throughout the entire leasing process. This ranges from the initial needs assessment, site selection, negotiation, site takeover, etc
One of the biggest mistakes is to Do-It-Yourself (DIY) and take on the complex real estate journey of finding an office space.
Many landlords may not have been actively marketing their properties online, therefore, it may take an insider with market intelligence to do a comprehensive market survey based on your needs.
Appointing the right, qualified professional for a quick (and free!) consultation can assist you in taking the weight off your workload. This will help guide you to obtain optimal office space for rent in as little time as possible.
Now that we have covered some planning aspects and mistakes, let’s take a look at getting proper market benchmarking, and why you should ensure that you cover this aspect, before renting an office.
4. Not Knowing the Market Benchmark
Falling down an expensive pitfall could be tough for a company to bounce back from. Many companies base their searches on cheap office rentals but forgot to ask: Are they are paying the right price for the space in terms of its size, location, and condition? An office in poor condition could give you a lower rental rate, but may cost you more on the renovation aspect. It is important to compare and find out market prices before entering into a negotiation. Also, what about coworking/ flexible space options? Is it more economical to go with shorter lease term first?
Analyze if you are getting the cheapest rent for your preferred location here.
To avoid future inconveniences and extra renovation costs, it is also important to consider these factors before locking down a lease, to ensure that you get the most value out of your office rental:
- Office Conditions
- Efficient Floor Layout
- Good Building Amenities
- Raised Floor System
- Accessibility of Building
- Availability of Window View
Getting the best value for your money is key to avoiding any future inconveniences thus, putting you in a great place for success. And to reiterate, having a professional to guide you through this process can be tremendously helpful. You would be able to ensure that you are not shortchanged in any manner. View this free checklist to find and rent office spaces in Singapore.
5. Not Reading the Office Lease Terms
The final mistake is not scrutinizing the Lease Terms that are presented in the Legal Documents. Below are some common terms pertaining to the Lease in the Legal Documents, that you would want to look out for.
You can find an useful list Office lease terminology here.
- Understand these key obligations while reading the office lease tenancy agreement:
- Lease Term
- Typically 2-3 years.
- Security Deposit
- How many months of security deposit is required?
- Option to Renew
- What are the renewal terms?
- Legal fees & Stamp Duty
- Usually borne by Tenants
- What is the site takeover condition? (ie. Original, bare, as-is)
These are the 5 most common office leasing mistakes that people make today. To avoid these mistakes, it would be best to engage a professional Real Estate Advisor to assist you in the leasing process.