Leases come in two flavors: long-term and short-term. Unlike choosing between ice creams—vanilla or chocolate? What sounds good to you? —the choice between a long- or short-term lease can have lasting advantages or serious repercussions.
What's long, what's short? A short term lease is typically for a term of one to five years. A long-term lease can be five years or more. An important consideration is whether you need the promise of establishing and keeping a prized location or if you need the flexibility to grow or relocate.
Short term opportunities. With a shorter commitment, you have the flexibility to up-size or up-scale as your company grows. This is especially important for start-up businesses. However, with a short-term lease, the landlord can force you to relocate after the lease is up. Rents can also change dramatically at renewal.
Long term realities. When you sign a lease for more than five years, you are locked into a decision, good or bad. However, your commitment gives you more leverage. Landlords are typically more willing to make improvements for long-term tenants. Rent increases will be pre-established. And if the building should be sold, you retain your location.
When choosing between a long- or short-term lease, consider the following:
- Your growth potential
- Is the location a perfect fit?
- Economic trends
- Shared office space alternatives
- Renewal clause options
Still have questions about leasing options and negotiations? Call DRK & Co. to talk with an agent.
