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  • commercial office leases

    anyone here in the know?

    i've got the opportunity of leasing an office direct from the owner, but want to clarify a few things.

    i.e. - what exactly makes up "outgoings?"
    - what should i be asking for/about?
    - is there a std lease agreement i can DL and use?

  • #2
    bro ham

    email me your exact queries to work and [L] will answer them

    Dubs

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    • #3
      email sent mate.

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      • #4
        outgoings is generally a monthly amount that comes from a yearly budget. It covers the things like strata fees, building insurance, a gardener, perhaps a cleaner for the outside of the building, general maintenance, water rates, land tax etc etc etc. Its basically ALL the costs incurred by the owner, then apportioned to the tenant on a rate per square metre.

        Each year there should be a reconciliation of the outgoings and if it works out that you've overpaid throughout the year, you get a refund, and if underpaid, you get a bill. Then they do a new budget for the next year and your outgoings will change. If its managed properly, the readjustment at the end of the year will be minimal if at all.

        So outgoings you pay to the owner/agent dont actually cover any of "your" outgoings like power etc.

        As to the standard contracts, is it for commercial premises or for a retail shop? If shop, then it falls under the Commercial Tenancy (Retail Shops) Agreement Act and everything is specified. If its other commercial premises, then basically anything goes, but sure there are common elements to most leases.

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        • #5
          nice answer Shmoo

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          • #6
            Yeah, agreed. Shmoo has it covered fairly well.

            There is no such thing as "a standard lease".... but that said people like REIWA have a moderately decent doco thats fairly straight forward (as far as legal BS goes) and doesnt attempt to screw the tenant too much.

            The first lease doco we were offered was unbelievably bad. I can only assume they thought we were young first timers and wouldnt read the fine print (or understand it).
            It had all sorts of crap like agreeing to sign over power of attourney etc so they could remove any caviets we placed on the premesis etc.
            They also wanted to slug us $1500 in legal fees plus an hourly rate if we wanted to change or negotiate any of it. (Sure, here, take our blank signed cheque!)

            I heard murmors that the retail tennancy act was going to be changed so landlords couldnt pass on legal fees to tenants. Not sure if that is inffect or not, but my advice is in this "tenants" market... dont accept this condition.
            We negotiated directly with the owner and pissed off the crap realestate agent - zero cost to establish the lease, used the standard REIWA lease doco and added in a clause that allowed us to sublease with permission of the landlord. (also you should probably include the clause that the owner cannot reasonably withhold permission. As there is an exclusion clause in the REIWA doco that attempts to remove this statement from the relevant references to the tenancy agreement act (or whatever its called)

            Just be exceptionally weary of open clauses in regards to what you are responsible for covering in regards to landlords expenses. Ie - be wary about signing blank cheque agreements. It seems to me that in residential leases, the tenant has most of the power/rights. In commercial leases its usually the other way round.

            I recommend the Small Business Development Centre (in Hay St?).
            www.sbdc.wa.gov.au
            Free service and you can make an appointment with someone in the right area to talk over your concerns and they can even look at a particular lease doco and advise you to some extent before you sign it or look for further legal info.

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            • #7
              ^^ i dont know how it goes with legal fees, but if you question a rent increase and each party engages a valuer to determine what the rent should be, then those costs are shared between the parties. Might be similar with legals???

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              • #8
                Originally posted by shmoo View Post
                ^^ i dont know how it goes with legal fees, but if you question a rent increase and each party engages a valuer to determine what the rent should be, then those costs are shared between the parties. Might be similar with legals???
                It all depends on what you have signed that you agree with in your contract!
                If its not stated in the contract, then things can default to statements in government acts etc. (which I'm not sure where that stands now.)

                Disclaimer: I'm not from a legal background - just coming from a commercial tenant point of view with basic legal advice that has been given to me.

                And sorry... back to the original question.
                I have yet to double check it all but budget for more than you expect with electricity costs as an outgoing. We just got our first bill and its about $70 per month for a 38 square metre office that gets used about half the time and has 3 computers apart from lights and aircon that is only on when we put it on. I knew synergy charged a higher rate for business, but I'm a little shocked that its almost three times our home bill.

                (anyone else got a business electricity bill that could be compared to this to see if its about right or worth investigating?)
                Last edited by xphread; 30-07-2009, 04:08 PM.

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                • #9
                  oh damn, that's something.

                  this is 80sqm or so, decorative lighting, kitchenette (coffee machine!), i'll probably have 3-4 computers, server, routers, printers, big-ass photo printer, airless spray gun, etc, etc.

                  i may need to sub-let a room to break even!

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                  • #10
                    Originally posted by Brougham View Post
                    oh damn, that's something.

                    this is 80sqm or so, decorative lighting, kitchenette (coffee machine!), i'll probably have 3-4 computers, server, routers, printers, big-ass photo printer, airless spray gun, etc, etc.

                    i may need to sub-let a room to break even!
                    thats pretty much the same as our setup (except for the commercial photo printing stuff) and we pay about $140-150 ish per bill. Air con use depends on the layout I guess, but we tend to have it on all the time.

                    It aint cheap running an office. By the time you count everything up, like your interwebs, your phones, your rent and outgoings, blah blah blah. Its never ending.

                    Good luck with it all mate.

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                    • #11
                      $150 per month? or 2-3mth bill?

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                      • #12
                        nah thats per month dude.

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                        • #13
                          cheers mate. must be a much higher rate, as our home (including all that gear, plus TVs, oven, etc) is less than that per month as it is.

                          what else is there as ongoing costs?

                          gas usage (if any).
                          phone line/usage costs.
                          ADSL costs.
                          insurances (contents, liability, etc).

                          water costs are in outgoings, right?
                          anything else obvious i'm missing?

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                          • #14
                            management fees if owner decides to get someone else to manage it (of which they usually add 10% to the bill.) That tab may fall on you, depending on how the contract is worded.

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                            • #15
                              nah, it'll be direct with owner.

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