A cost analysis between buildings is essential for your business to properly estimate its future rental costs.

Any analysis of a given space’s desirability typically begins with the fixed rent that the landlord quotes to you. But this starting point must be evaluated in light of other factors.

Term of the lease. Landlords are typically willing to make concessions for longer-term leases. A company’s needs may change, however, so try to negotiate a shorter-term lease with renewal options.

Rent escalations. Fixed rent over longer-term leases is relatively rare. Sometimes, landlords insist on annual increases based on the percentage increases in the Consumer Price Index (CPI). If your landlord insists on rent escalations, try to arrange that a CPI rent increase does not kick in for at least two years. Then, try to get a cap on the amount of each year’s increase. If you have to live with a rent escalation clause, consider a predetermined fixed amount. Common area maintenance, HVAC, and operating costs. Take into account operating costs that the landlord may pass on to a business. If the landlord is charging separately for these services, try to negotiate a fixed fee or cap on the amount.

In this case, your company’s moving in will naturally cause cost increases. Get the landlord to count the base-year costs as if the building were fully occupied and operational.

Landlords often try to get tenants to pay for increases in property taxes on the building. Watch out for this because if the property has been held for a long time before being sold, the value of the property may be significantly higher for property tax purposes when sold. The end result is a higher property tax that you may be stuck paying. Tell the landlord that having to pay for such an increase is not fair to you.

Right of first offer or first refusal for additional space. A right of first offer obligates your landlord to present any space that becomes available in the building to you first before marketing it to third parties. A right of first refusal on space obligates the landlord to bring you any deals he is willing to sign with third parties for space in the building and allow you to match the deal and preempt the third party. See Option to Expand Under Office Leases for more information.

In addition, some landlords will charge extra for services supplied other than on “business days” or “after hours.” So look at this clause carefully and try to limit charges for extra services to those that are truly extraordinary and not to be incurred on a regular basis. This can be of particular importance for a startup business, where workers often spend nights and weekends working.

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