What should you pay attention to when renewing office lease contracts?

Table of content

1. Renewal of virtual office lease contract

2. Extension of office lease by area/traditional office

2.1 Re-evaluate the quality of office services

2.2 Orientation for development and expansion in the coming time

2.3 Consult the office leasing market at the time of renewal

2.4 Terms to be renegotiated (if any)

2.5 Time to extend

Depending on the terms of the original signed office lease contract, the renewal period of the office lease will take place after 1-3 years, or more. Without a plan or regular notification, the renewal is often delayed and causes many problems for businesses.

Some notes in extending office lease contracts that businesses need to pay attention to:

1. Virtual office lease extension

For the type of virtual office / representative office / business address... are the types of offices that need to be noted in terms of renewal. As it is directly related to tax issues and many other legal issues

Normally, virtual office rental service providers / professional business registration addresses will send email notifications about the renewal issue 30-45 working days in advance. However, not all service providers actively "reminding appointments". In some cases, customers have legal problems when they do not renew the contract in time.

2. Extension of office lease contract by area/traditional office

For the type of office for lease by area, there are 5 main issues businesses need to pay attention to:

2.1 Re-evaluate the quality of office services 

Re-evaluating the quality of office services businesses are using is extremely necessary. This decides whether to continue or end the contract as term.

What issues do your employees feel satisfied/unsatisfied with when using the service?

• Is the toilet clean every day? 

• Are elevators and stairs safe?

• Are office equipment and facilities in good working order? Is there regular routine maintenance?

• Is the air conditioner leaking water? Are the walls solid enough? When it rains, does the wall leak/sweat? 

• Is the parking lot large enough, can all employees park their cars in the building?

• Are security staff friendly and professional?

• When there is an incident, a problem that needs support, how is the customer service and support from the building management?

These are some of the issues that business owners need to consider and evaluate based on their employees' contributions to decide to extend or terminate a contract.

There won't be any problems if the use of the office is 100% satisfied. But when the working environment does not meet the basic standards, it often affects the work performance and even the assets of the business.

Re-evaluating the quality of office services businesses are using is extremely necessary.

2.2 Orientation for development and expansion in the coming time

After 1-2 years of operation, enterprises must evaluate the development situation as well as prepare long-term plans. The development orientation of the business greatly affects the decision to renew the lease contract. 

If the business plans to expand its scale and market, consider renting a larger office space. Because when a larger area is needed but the building is not enough to provide, ending the contract before the deadline will cost a lot of fees, especially the deposit.

2.3 Consult the office rental market at the time of renewal

At the time when it is necessary to renew the lease, the business can take time to research the market to ensure that the rental price after renewal is a reasonable price. 

Most rental rates for all types of real estate are adjusted after 1-2 years depending on the agreement and agreed terms. The percentage increase in prices ranges from 7-10%/year, usually based on the annual percentage of inflation.

In addition, when consulting the market, businesses will have more options to choose from. Office relocation takes a lot of time and money, but getting a better working environment is worth considering

2.4 Terms to be renegotiated (if any)

In some cases, when renewing a lease, the lessee (enterprise) proposes to change some terms to better suit business activities. For example:

• Payment period: 1 month - 1 time, 2 months - 1 time or payment date to match the business cash flow

• Currency: This term is often found in foreign businesses

• Utilities such as: basement parking, meeting room use, office cleaning...

At a time when it is time to renew a lease, businesses can spend time researching the market.

2.5 Time to extend

The extension period is based on the business plan of the enterprise. Most service providers are willing to help businesses renew leases instead of looking for new customers. 

The extension period depends on the agreement of the Lessee and the Lessor. Can range from 1-3 years.

• Short extension: businesses have more options, easier when ending contracts

• Long term extension: get a better rent, avoid the problem of increasing rent every year.

Depending on the leader's point of view and the business situation of the enterprise, there are different expectations when using office services. Please take the time to consider the issues related to the decision to extend the office to ensure the most stable working environment for employees.