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Types of Commercial Lease Agreements: Office Space for Rent, Austin

December 5, 2021/in News /by officespace

Are you looking for a commercial property to lease in Austin? Whether you’re relocating from your current address or opening a shop for the first time, there are numerous rental options available.

The lease agreement is the mechanism by which a tenant can lease a commercial space directly from a landlord. Commercial leases are different from residential contracts and often vary from state to state city to city, and market to market.

If you are looking to lease office space in Austin, this overview of commercial lease agreements will give you more insight into the market.

Inclusive are tips on finding the best office space in Austin, some red flags to be aware of, and leasing costs. So let’s get right in.

Commercial Lease Types

Before you sign on the dotted line, you need to know what kind of agreement you’re getting into. This is because a lease determines what you’ll pay for and stipulates your liabilities as the tenant.

Legally, the three main types of commercial lease agreements are set forth below. In Austin, leases are customarily full service (rent is inclusive of all expenses) or a Triple Net Lease or “NNN.”:

Single Net Lease

Although it’s the least preferred by tenants, the single net lease is one of the lease agreements you may come across. Here, the agreement lists the tenant as the party responsible for paying the building’s base rent and property taxes.

The landlord covers other costs arising from operations in the property.

Double Net Lease

This type of lease agreement is similar to a single net lease. But, only some of the costs are more rationally distributed. In double net leases, also known as ‘NN’ agreements, the tenant pays two of the three property expenses. 

Depending on the contract details, these can be taxes and utilities or taxes and insurance premiums. Either way, the landlord covers the remaining expense.

Triple Net Lease

A Triple Net lease is the most common lease structure in the Austin market. It also tends to be the most complicated lease because the tenant absorbs most of the landlord’s financial responsibilities. In this type of agreement, the lessee pays all property expenses, including taxes, insurance, and maintenance.

On the bright side, NNN leases have lower rental amounts as the tenant covers most of the cost. 

Common red flags in Lease Agreements to be Aware of

Now that you know the types of leases and each category, what remains is signing the dotted line. Before you pull the trigger be aware of these common red flags:

Landlord Financial Woes

General knowledge about the landlord is beneficial. Consider doing background research of the owner’s financial situation. Our brokers are familiar with the Austin market and the reputation of various landlords, but here are a few things you may want to consider:

Look at the current state of the building, check to see if it’s uncared for or there are unoccupied office spaces. Plus, if the tenants have a poor track record of making payments, it could be that the landlord is struggling financially.

Unclear Charges and Rights

Our brokers review every lease agreement for commercial terms. Some landlords don’t clarify the tenants’ rights and net charges in a lease, which are severe omissions. This is because you’ll need them for a financial audit at the end of every year. 

Furthermore, if the landlord fails on their obligations such as maintenance, there must be consequences for these actions.

Poor Delivery Conditions and Repair Terms

Depending on the lease agreement, tenants may inherit the problems that come with the premises. 

If there are problems with major systems like HVAC, plumbing, and electrical,  the lease should stipulate who will cover these costs. 

Ambiguity

Ambiguous statements or varying numbers in the figures can cause confusion.

The best way to avoid misunderstandings down the road is to have a professional tenant representative and your attorney review and assist you with lease negotiation.

Tips on Locating the Best Office Space for Rent in Austin

Settling a lease agreement could be a complicated and lengthy process, and one our brokers are equipped to assist with. These tips will help you minimize errors and negotiate a feasible price offer for the space you intend on leasing. They include:

Consider Tenant Representation

Tenant representatives, such as Austin Office Space, are agencies that represent the tenant during lease agreement negotiations. Other agencies often represent both the tenant and the landlord, which can, at times, cause a conflict of interest for the tenant. Determine Your Requirements

What will you be using this space for? This is the first step to finding a property that suits your business needs. 

If you have a growing workforce, you’ll need a property with growth possibilities.

Send Proposals to Potential Landlords

Before getting to the actual lease signing phase, sending out lease proposals is often beneficial to ensure that the space, and the potential landlord, are a good fit. After stating your terms, you will know if they’re willing to consent to them or not.

It is best to consult with a tenant representative to help you draft a complete commercial lease proposal that you don’t have to bargain for yourself. Tenant representatives understand the market, what concessions a particular landlord might be willing to make, and they can also help analyze any feedback proposals you get to determine the best offers.

 

Cost of Leasing a Commercial Space in Austin Texas

While other factors matter, none is greater than the price because it can break or seal the deal. But, the cost may vary from one market to another, and the Austin office market continues to grow.

Unlike some other commercial real estate markets, landlords in Austin calculate rent monthly as opposed to annually.

So, to get the exact amount you’ll have to pay, add the base rent to the operating expenses, or “triple net”and multiply the figure with property square feet. Then, finally, multiply the resulting figure by twelve if you want to get an annual fee.

Getting the Right Office Space for Rent in Austin

Finding an office space for rent in Austin is a big step, and leasing an even bigger one. Before you start hunting, consider these points and hire a professional to help you succeed. In Austin, tenant representatives are paid out of the landlord representative’s commission, so generally, their assistance to a tenant is at no cost to the tenant.

If you want a smooth leasing experience, please contact us for trusted tenant representation in Austin, Texas.

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Chad was fantastic. We had a very short timeline to find office space and move in so we could start a new firm on January 1. Even though we had a short timeline and specific needs, Chad made it happen. He was smart, responsive, resourceful and understood what we needed. He also helped us find vendors for furniture, internet, phones and other items. We got the space, moved in, and were up and running and open for business on January 1.
Katie C.
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Chad is absolutely amazing!! He helped our company find an office space to lease when moving the business and our employees from Tampa FL, to Austin. Everything else about the move was stressful, but working with Chad made acquiring a space and moving into it super easy. Eventually, when we decided to sublease part of it out, Chad helped us find someone immediately. Now that our lease is officially coming to an end, we've decided to work with him again to find our new space. He is so patient, down to earth, and professional, and he has been working really hard to find a new spot that meets our needs and price range. He is a great negotiator, and he also brings a wealth of knowledge and makes himself very available to answer our questions. I'm so glad we found him!
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Mark S.
Been working with AOS and Chad for nearly 3 years now - in that time, he's truly gone above and beyond to help out and find office spaces that match the changing needs of my company.Not only is Chad someone who takes great pride in his craft as a broker (he's worked some great deals for us), but he has genuinely done his best to take care of us and help us navigate the waters of commercial real estate with true integrity. He's helped us review documents, tour as many spaces as we wanted to look at, and been extremely helpful all along the way.Truly one of the best people I've ever done business with, and cannot possibly say enough good things about the services that he and AOS have provided to us over the years.If you're looking for a new space to build your business, AOS is the best guide possible.
Heather F.
Heather F.
Gentry and Chad were awesome to work with. We needed to move very quickly with very little notice. Gentry sent a long list of locations for me to review and Chad talked me through them and then met me to view the spaces I selected. We found a great spot and the whole thing took less than two weeks, start to finish. I highly recommend this team of friendly professionals.
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Chad helped us find our commercial lease. He and his team were professional and responsive at every steps. They took the time to understand our project to provide us with the best choice and advices. I recommend Chad and Austin Office Space without reservation!
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We had a good experience using Austin Office Space and Chad Jewell to handle our subleasing process. The level of communication during the process was good and we felt informed of developments throughout. Chad was easy to work with and understood the local market. I would recommend him.
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Working on a TV show in Austin and needed adequate space for our production. Austin Office Space was extremely helpful and worked fast for our quick turn around. Highly recommend reaching out to AOS for any office needs. Will use them again!
Mike S.
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Chad at AOS was extremely helpful in quickly compiling a list of office spaces for us to consider. He even made up a document complete with pictures and locations that made it very easy to weigh our options. In addition, he even put me in touch with another company to find out what they had to offer. It was a very helpful experience.
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It's not easy shopping for commercial real estate in a hot market like Austin but Chad with Austin Office Space (AOS) was there for us as we patiently combed through multiple options (all shapes & sizes) as we were open to building new or renovating an existing space. But what won us over was that he used his contacts to help find us a space before it went out to the public and that's the key to beating out the competition in a hot market. Chad responded to all my emails day & night, and I appreciate his willingness to answer even the mundane questions since this was my first time to buy commercial.
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My thumb was completely green as this was my first real office. Chad helped me through the process and found me the perfect space. Highly recommended.
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Chad is an amazing person to work with. He is an extremely pleasant and professional person and has access to a great network to help you find the right office space. He definitely is the person who will go the extra mile to help you find the right location. We highly recommend working with him!
James B.
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Chad Jewel is awesome. From the day I met him through negotiations for our new space, he has been wonderful. If you are looking for office space, you just can do better than Chad! Two Thumbs WAY up!!
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