Long-Term vs. Short Term Commercial Leases

Lease agreement with pen;

If you’re thinking about leasing office space, you may be wondering if it’s better to sign a long-term lease or a short-term lease. This is particularly important if you are a small business whose very success or failure could be riding on the decision. Not surprisingly, the answer varies depending on your company’s specific needs and goals, but there are advantages to each. To help you choose the best option, consider which benefits are most closely aligned with you and your business goals.

Benefits of a Long-Term Lease

A long-term lease typically spans five years or more, and offers small businesses the following advantages.

Bargaining Power

Since landlords prefer longer leases, you may have more leverage to negotiate a lower monthly rental rate, a rate freeze, or even a few months of free rent. With a short-term lease, there is no incentive for a landlord to offer discounts, so they tend to charge higher rent and offer fewer concessions.

Custom Build-Outs

While short-term leases will sometimes include new paint and carpeting, the level of customization usually stops there. Long-term leases, on the other hand, are more likely to include significant cosmetic improvements, construction projects and complete build-outs customized around your needs.

Stability

A long-term lease means you won’t be bouncing around year after year, or forced to relocate in a short-period of time, which is both costly and inconvenient for you, your employees and your customers. You’ll also know how much your rent will increase from year to year, which makes it easier to forecast and budget.

Is a Long-Term Lease Right for You?

Since it’s estimated that 80% of new businesses fail in the first year and a half, long-term leases are generally better suited for businesses that have passed the 18-month mark. It also helps to have a clear vision of your future. For instance, being locked into a long-term lease can be especially risky for those in volatile or uncertain industries, such as startup technology firms.

Benefits of a Short-Term Lease

A short-term lease typically ranges from one to five years, and offers small businesses the following advantages.

Quick Turnaround

If your business does not require a lot of office space customization, short-term leases are ideal for their move-in readiness. And because short-term leases are typically less complex, and do not include the lengthy negotiations common with long-term leases, the process tends to move much faster.

Flexibility

With a short-term lease, you have the ability to quickly scale up or down, or move to a new market altogether should your needs change within a few years. If you anticipate growth in the near future, or if your future is unknown, a short-term lease allows you to act and react accordingly.

Easy Out

A long-term lease can be especially scary if the future of your business is uncertain. Short-term leases involve less risk because there’s less of a time commitment, so you can easily cut your losses and move on if your business venture fails.

Is a Short-Term Lease Right for You?

Startups and entrepreneurs, in particular, are drawn to short-term leases because of the limited risk and ultimate flexibility. Short-term leases also make sense for temporary offices or “pop-up” businesses, looking to test a market before fully committing. And because they are typically move-in ready, short-term leases are a good option if you need space quickly.

Short-Term & Long-Term Office Leases in Boston Area

When looking for office space, location is important, but so is finding the right lease terms for you and your goals. If you are in the market for office space in the Boston area, The Lakeside Park offers both short-term and long-term leases starting at just $16 per square foot. We also offer a variety of business services, including office space customization.

To learn more about our lease options and office space rentals near Boston, request a tour or call us at (781) 557-5555.