Short-term commercial leases are not always the norm, but have recently become the ideal option for many businesses. Issues arise from even the easiest leasing processes, however: Finding the perfect commercial space for your company is only half the battle. Negotiating the best possible lease agreement is still an essential part of the process.
Short-term leases often have benefits that business owners may not have considered, but they can be challenging to navigate. This guide will explain some of these perks and show you how short-term leases may be the solution to your leasing needs.
What is a Short-Term Commercial Lease?
A short-term commercial lease describes a rental period that generally stretches from one to 12 months. Anything longer than 12 months can start creeping into the long-term commercial lease territory. These short-term commercial leases typically span six months or fewer, but weekly and month-to-month arrangements are also quite common. Long-term commercial leases, on the other hand, tend to last for five years.
When it Might Be Good to Consider Short-Term Leases
Many companies want to set up shop where the action is, near potential investors, networking events, and industry giants. Many busy areas — such as New York City — tend to mandate long-term leases, however. Your financial situation, the type of company you have, and other factors might mean bustling locations and long-term leases won’t work. The following types of companies may want to consider short-term commercial leases over long-term ones:
- Startups
Younger companies are often growing quickly but do not know if they will need less or more space over time. As a result, these companies can benefit from short-term commercial lease agreements until they become more established in their spaces.
- Certified public accountants (CPAs)
CPAs may use a certain amount of office space to process and file their client’s tax returns every year, but that’s typically only for a set window of time. For them, short-term leases are needed as they only need this extra space for a few months out of the year.
- Account managers
Many times, account managers need temporary office spaces to hold regular meetings with prospective clients to close deals or negotiate contracts. Consequently, long-term commercial leasing would not work, as they only need the office temporarily.
- Human resource directors
Depending on the company, human resource directors may need external space for executive suites or administrative tasks. For example, a hospital might staff its human resources, IT, marketing, and other non-essential medical services in office buildings near the medical center rather than taking up valuable space in the hospital itself.
- Companies with multiple offices
If a business has multiple locations, renting space for short periods of time can give its employees the freedom to work from any office within the network. This can be immensely valuable for those who need to travel to many different company locations.
Many types of businesses — from small businesses and a company looking for a month-long lease to conduct meetings to o seasonal retail stores searching for flexibility — can benefit from short-term commercial leases. Understanding the perks can help you decide if it’s the right option for your business.
5 Perks of a Short-Term Commercial Leases
Companies that want to test the market or are looking for temporary extra space will find that short-term commercial leases provide the most benefits. Some perks of short-term commercial leases include:
- Easy out if needed
Starting a new business is risky, and it’s no surprise that many new businesses fail in the first two years. Short-term leases are ideal for those business founders who will not have to be on the hook for unpaid rent if their operations go south. The option provides a low-risk rent opportunity while owners experiment with their new ventures. - Flexibility
Many small or new companies are not sure how fast they will grow or how large they will get, making commercial real estate challenging. Getting into a new lease for extended periods may be a struggle as they will not know what their company actually needs, but short-term leases provide these businesses with the flexibility they want. Plus, it gives them the option of moving onto different spaces as they grow. - Less hassle
Unlike long-term leases where you have to either think about subleasing or figure out how to transfer your lease to another tenant to relocate, short-term leases allow a company to quickly move on to new locations without the headache of long-term contracts and figuring out how to terminate the lease. - Suitable for temporary space
Whether you are a CPA, only looking to rent space for a few months, or need temporary space while your new office is finished, short-term leases can fulfill business’ needs. - Regular renegotiation of terms
Short-term leases are renegotiated several times a year. That can mean you sometimes see rent hikes, but it also means you do not have to suffer through conditions for long if you do not like the terms of your lease. You’ll have the opportunity to speak with the powers that be within a few months to ask for a better situation or leave.
Additional Questions? Ask the Experts.
If you are deciding between a short- or longer-term commercial lease, there are certain factors you need to consider. Are you looking for flexibility, or is long-term control crucial for you? As a result, you need to think long and hard about your overall objectives, outlook, and goals before getting into any lease.
The right broker can help answer all these questions and assist you in finding the ideal space for your business needs. Contact The Genau Group today to speak with an expert about any short-term commercial lease questions you might have.
