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Purchase Option Free Information On Purchase Option For single-tenant office buildings, tenants often want a right to purchase the building at a predetermined price. Landlords prefer to avoid this. A compromise is providing the tenant a first right of refusal. Sublease Issues Landlords want the tenant to make rental payments throughout the lease term, but don't want the tenant to profit from subleasing the office space. In some cases, the tenant has the right to sublease the space subject to the landlord's approval. There's often a clause that the landlord's approval shall not be withheld unreasonably. There's also often a clause limiting the types of businesses which can sublease from the tenant. Sublease payments in excess of payments on the primary lease can be an intensely negotiated item. Dedicated Parking Dedicated parking is another issue where interests diverge. Tenants love to have parking dedicated to their employees and clients. Landlords try to avoid having parking dedicated to any one user or business. Peak traffic for a business may occur in a short period of time. However, the parking spaces are typically dedicated 24 hours per day. Expansion Options and First Right of Refusal Expansion rights and first rights of refusal are negotiable for office space depending on market conditions. Assume you are starting a new firm which is expected to grow quickly. You're initially taking 2,000 square feet of space but hope to expand to 5,000 or 10,000 square feet of space within 18 months. Having the right to take additional space at a previously agreed-upon rental rate and to claim additional space through a first right of refusal is valuable. Once the business is successful and established within the building, negotiating rental rates at a favorable level will be more difficult. Example For example, assume your business has been operating successfully for two years and you expect to expand during the next 12 months. Unfortunately, your landlord tells you he just leased the spaces on either side of you. A first right of refusal for additional space can allow you to avoid this problem. Attempt to negotiate a fixed rate, which is determined while negotiating the lease for expansion space. Next Chapter Leasing Office Space - Relocation Clause
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