Leasing vs. Renting Office Space
Renting a new office space can be complicated. From the apparent points like location, suite size and amenities to the more complex legal jargon, the process can become involved. Deciding on renting versus leasing the space is undoubtedly one of those factors. Did you know that there’s a difference between a lease and a rental agreement?
It’s a question that many who are new to the experience are unfamiliar with. Learn more about leasing versus renting office space so you can feel confident when you decide to either lease office space or rent office space.
Simply put, rent is the process of paying a monthly fee in exchange for access to a space or property. A rental agreement has two parties – the landlord and tenant, and is typically for terms of 1 year or less. In Canada, the term ‘renting’ is more commonly used when referring to the lease of residentials spaces, although it’s not uncommon to hear the term used in adverts for commercial spaces as well.
Commercial Lease Agreements
Think of a commercial lease agreement as the rental agreement’s big brother. These agreements are typically between two businesses (rather than a business and an individual, or two individuals as is common in rental agreements) and generally cover terms of 3,5, or even 10 years. If you rent a space for your business you may choose to enter into a commercial lease agreement with the landlord. This written contract that helps ensure both parties know what their rights and responsibilities are.
Most commercial lease transactions start with a binding offer to lease that sets out the most important business terms. Commercial leases in Canada are typically on a fully net basis, which requires a tenant to pay basic rent plus a proportionate share of the realty taxes, insurance, utility, and other maintenance charges for the building.
A Solution for Everyone
Ultimately, rental agreements and commercial lease agreements are both forms of lease agreements and will be unique to each circumstance. If you’re new to the leasing process, or even if you’re well versed but are working with a new landlord, consulting with an unbiased third party, such as a broker, can help you navigate your way to a fair and reasonable agreement for all parties.