To attract high-quality, reliable long-term tenants, commercial landlords in Sydney often offer rent incentives to entice businesses into a commercial office lease. It’s important to consider these and factor them into your calculations when searching for your next workspace, because they can often make a deal much more cost-effective over the course of the lease. At Vestra, we deliver high-quality office fitouts for a wide range of businesses across Sydney, so we know the industry well and have worked on projects where lease incentives were instrumental in the client deciding which property to select. Read on for a quick introduction then contact our team for a free quote on your fitout.
What is a Rent Incentive and How Does It Work?
Rent incentives are used to make a commercial lease more attractive to businesses and to help landlords secure long-term tenants. They can often take the form of pre-agreed rent-free periods set out in the contract, contributions to office fitout costs, or rental discounts. All the terms of rent incentives will be clearly stated in your lease agreement.
Understanding Key Leasing Terms
There are a few key leasing terms that are useful to know and understand before you sign a lease agreement. These may include:
- Gross rent: this is the basic rental rate as advertised, before any rental incentives or discounts are agreed.
- Net rent: this is the actual rental cost after any rent incentives, such as discounts, have come into effect.
- Incentives: incentives are pre-agreed conditions that may change the actual amount of rent you pay, or provide for landlord contributions to your office fitout costs.
Why Landlords Offer a Lease Incentive
In a competitive commercial rental market, lease incentives can help landlords to attract desirable tenants quickly and encourage them to sign a long-term office lease in exchange for certain favourable conditions.
Calculating Lease Incentives
You should factor the impact of any lease incentives into your budget planning for the duration of your lease. For instance, your gross rental rate may be offset by landlord office fitout contributions, or by a discount for part, or all of the lease period. Make sure you include these impacts to get a clear picture of the real-terms cost of your lease.
Types of Lease Incentives
Lease incentives can take many forms, but some of the most common include cash contributions to a tenant from a landlord, towards the cost of an office fitout, rent abatement, where rent is reduced for a specific reason for an agreed period, or reduced rent, where a landlord offers a general discount on rent for the duration of a lease. Your business needs will determine the type of lease incentives that will be beneficial to you.
Renting Commercial Office Space
It is helpful to fully understand lease incentives and know what to look for when negotiating your commercial office lease. If lease incentives include cash contributions for office fitout solutions, then you can contact the team at Vestra to discuss where we can best invest this for a high-quality, efficient and cost-effective service.
Get professional advice on office leases and tailored office fitout solutions to maximise lease incentives from the team at Vestra. Contact us online today or call 02 8310 9922.
