A Guide – Short Term And Long Term Leases

When you are assigned the task to find the best office space for renting out you will need to look at the options whether you want to look at a short or long-term lease. It is important for businesses that are small in scale because it will determine if the organization will be successful or not by this decision. There is no accurate answer whether an organization should sign up for a long or short-term lease because this is based on the performance of the organization and every company and its needs are different. However, there might be advantages and disadvantages both when choosing either option and therefore, thorough analysis must be taken into account. The decision is in the hands of the finance and upper management who will drill down to the final decision before going forward with the appropriate lease.

The benefits of a long-term Sheung Wan office rental are as follows:

Solidity – The solidity refers to the stability of the lease where a fixed period will which is typically for five years or more enabling the organization to even extend the time is the tenure is good even if the building owner changes. The disadvantage of short term agreement is that the period will be probably a minimum of one year and the maximum would be five years. There is also a threat that the organization might be asked to move out unexpectedly

Predictability – the long-term agreement will help the tenants be aware that the rent will be increasing each year even after considering the conditions of the market. However, those organizations that sign up on a short-term leave might hamper their growth because the cost of properties increase greatly every year.

Improvements – There are property owners that will allow the organization to make minor changes to the property for those on long term leases. In the case of short-term leases, the land owner will be very strict and not allow any changes.

 

Short term leases are said to be attractive due to the following reasons:

Flexibility – the tenants of a short-term lease are able to change the location easily because the rules of the lease are not very strict. However, this is not case for those who have signed a long-term lease who will need to sublease or transfer it to another potential tenant in order to move to a new space.

In the event that the business fails, the short-term lease allows businesses to cut off their losses and go ahead without paying for the unpaid rent.

 

As a business, it is very important that the organization makes the right call and decide the exact type of lease after considering the pros and cons of the leases and the size and potential of the organization.