The Risks of a Long-Term Office Lease

April 28, 2015 | Jennifer Goodwyn

Entrepreneurs and small business owners typically look into renting or purchasing commercial office space when their home office overflows into their spare bedroom or kitchen. If the sales volume or staffing needs of your small business have grown to the point where they can't be accommodated at home, finding a physical office space may be a necessary next step. While leasing office space can present a more polished image to your clients, business associates, and employees, it comes with its own set of financial and personal risks. If you're about to sign a long-term office lease, consider these potential risks before crossing the t's and dotting the i's.

Limits Growth Opportunity

The main problem with leasing office space long-term is that it limits your potential growth opportunity. Depending on your company, its industry, or your success, you may need to double, triple, or quadruple the size of your office space in one, two, or three years. Since long-term office leases typically require a commitment of at least five years, it'll be exceedingly difficult to increase the size of your office overnight. Likewise, if your business takes a turn for the worse, downsizing office space can also prove to be difficult. Fortunately, many executive suite leases are short-term or month-to-month, allowing you to increase or decrease the size of your office without facing any legal or financial penalties.

Property Management

If you decide to purchase or lease professional office space, you'll likely have to hire a property manager to ensure everything is in working order. Although a qualified property management company will ensure the grass is mowed, the windows are clean, and the electricity bills are paid, these are things you won't have to worry about if you seek an office space alternative, such as investing in shared office space or leasing a virtual office or executive suite. Typically, management fees and janitorial services are automatically included in the monthly fees of these office space alternatives, allowing you to focus on what really matters – growing and expanding your business into the company of your dreams.

Location, Location, Location

If you prefer the flexibility of working in one city in January and in a completely different city in March, you likely won't want to be tied down to the same office in the same city. Unless you're absolutely sure your company will be operating out of Los Angeles or Chicago five years from now, committing yourself and your business to a long-term lease can be a risk. As the economy continues to fluctuate, new up-and-coming start-up cities are constantly springing up – stay ahead of the curve and say hello to freedom by signing a short-term lease or by utilizing the services of a virtual office.

Noise and Other Distractions

If you're accustomed to the peace and quiet of a home office, you may find that working in a traditional office environment is distracting. While leasing office space may get rid of the distractions of home life, you'll soon find that your household tasks, kids, and pets, are far less distracting than co-workers' phone calls, texts, and incessant chatter. If you prefer working in a quiet, distraction-free zone, you should think twice about signing a long-term office lease. Instead, consider renting an executive suite – they're as private as you'd like them to be and, if you're not in the mood to take phone calls, a professional receptionist will take them using your company's name.