One Problem for growing companies…

Office Space for Rent Gurgaon

The problem of Space & Expansion: In our experience of working with various multinational organizations in helping find a suitable Office Space in Gurgaon, we have had one typical problem that has always been there without a solution, lets understand the problem first:

All businesses like to grow and plan their growth over a period of time, so they start with a smaller team initially and over the next 1 or 2 years, if business is good, they grow out of the space, they hire more people as they grow but the space doesn’t grow with the number of people… ultimately, they have to move the entire office and spend more resources and time in relocating.

During the initial phase of office space acquisition, the tenant would have either spent a huge amount of money on doing up the interiors of the space or would have signed up a lock-in period in case the landlord would have done up the space. In either case, the tenant would end up loosing money, time and resources to relocate. But the point is, that the business growth can not be stopped when the going is good…

So, the question is if there is a solution to the problem? How would it be possible for the tenant to expand within the same building or on the same floor? Well while there is no real answer to this problem, we believe that there are some ways in which one could possibly cover up for the proposed losses. Here are a few things that one could possibly consider when it comes to finalizing the office space for rent.

There are two things that one should look at, out of these, one is pertaining to the documentation and how the lease is to be worded, the other is more of a physical aspect of the space that you finalize in the first place. So, lets look at what would be a good thing to add in the Lock-in clause or on the overall lease. There are two ways to cover up for some of the losses or lets say proposed losses should the company want to expand and move to a bigger size office. The first recommendation would be to reword the Lock-in clause to read something like this:

“That in case the company terminates the lease before the lock-in period is over, it will have to pay to the landlord the rent for the remaining period of the Lock-In period, however, in case the Lessee can find a suitable replacement tenant within the Lock-in period that is acceptable to the Landlord, in such case, the Lessee would be exempt from paying the balance months rent of the Lock-In period.”

This of course is to capture the essence of the clause, I am sure different lawyers would find different ways to word the same clause.

The second way that I believe should be interesting is to look at a space which is a larger space held by the same landlords and take a “First Right of Refusal” on a pre-agreed additional space that is adjacent to the space being leased and also add a clause within the lease with a minimum time period for the clause to come into effect. e.g. if you are signing this clause in the lease, it would be great if you could get the landlord to agree to making this clause come into effect after 1 year or operations and that the landlord to keep this specific space empty for the 1 year period. (Although it is difficult to get the landlords to agree on this, but it is a possibility and should not be ruled out.)

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