Enter to open, tab to navigate, enter to select
Office Leasing Toolkit (TX)
Practical Law Toolkit w-021-2452 (Approx. 16 pages)
Resources to assist companies in understanding and effectively negotiating office leases in Texas. This Toolkit includes links to Practice Notes and commonly used forms, such as leases, term sheets, guaranties, estoppels, and consents. These resources provide analysis of common leasing concerns, including tenant rights, landlord remedies, operating expenses, expansion options, assignments, and security deposits.
Companies typically need office space to house their employees and run their businesses. Leasing space is often an efficient way to meet this need. Companies invest significant time and money in finding the right space and finalizing the lease agreement. Most office leases are long-term commitments, often five years or more, with ongoing obligations and risks. When negotiating leases, companies should:
- Identify short- and long-term business goals. The clearer the business goals, the more likely the finalized lease agreement will be an effective and useful tool for the company and its business vision. For example, if the company believes it will encounter growth in the near future, the company should negotiate for additional space options during the letter of intent phase and in lease negotiations.
- Effectively negotiate the business terms and lease provisions. The company should understand the specific issues and lease provisions that affect the company's ongoing obligations. For example, negotiating the provisions specifying a tenant's obligation to pay its proportionate share of the building's operating costs may create a more fair and balanced clause that effectively saves money for the tenant each lease year.
- Obtain appropriate protections. The company should consider the time and money it invests in the space and whether it should negotiate certain protections to ensure the lease is not prematurely terminated. For example, in many instances a landlord's lender has priority over a tenant's lease and may be able to terminate the tenant's lease if there is a foreclosure action. The tenant may want to obtain a subordination, non-disturbance, and attornment agreement (SNDA) from the landlord's lender, to ensure that a landlord's default under its loan, and a subsequent foreclosure by the lender, would not permit the lender to prematurely terminate the lease.
The continuing costs of an office lease can affect a company's bottom line. A company planning to lease office space should use the general practice tips and negotiating techniques discussed in the resources linked in this Toolkit to better assess and allocate the costs and other risks associated with an office lease.
This Office Leasing Toolkit provides links to resources designed to assist companies in the Texas market to:
- Understand the office leasing process (see Office Leasing Overview and Brokerage and Letters of Intent).
- Negotiate favorable lease terms (see Office Lease Forms and Supplemental Lease Clauses).
- Create flexibility that suits the company's particular business needs (see Tenant Options and Additional Rights and Lease Assignments and Subleasing).
- Protect the company from third-party interests (see Subordination and Estoppel Issues).
- Understand possible landlord remedies, up to and including eviction (see Defaults and Remedies).
- Manage the ongoing lease relationship (see Lease Administration).
- Terminate commercial leases (see Lease Termination).
In addition to the Texas specific resources and guidance, this Toolkit also includes links to several jurisdictionally neutral office leasing resources. These resources include forms and discuss issues that are useful and relevant to landlords and tenants in every state, including Texas.
Finding office space in Texas often involves taking a sublease. For a jurisdictionally neutral Toolkit designed to provide general guidance and resources on subleasing, see Assignment and Subleasing Toolkit (National and Select States).
Many office buildings in Texas are ground leased, and parties must understand the peculiar impacts of ground leases. For a jurisdictionally neutral Toolkit designed to provide general guidance and resources on ground leases, see Ground Leasing Toolkit (National and Select States). For more information about ground leases in Texas, including sample documents, see Ground Leasing Toolkit (TX).