What are the key indicators of a successful lease agreement?

1 Rent and incentives

The rent is the amount of money that the tenant pays to the landlord for the use of the property. It is usually expressed as a rate per square foot or per month, and may vary depending on the market conditions, the location, the quality, and the size of the property. Incentives are benefits that the landlord offers to the tenant to entice them to sign or renew a lease agreement, such as rent-free periods, fit-out contributions, or break options. The rent and incentives are the main factors that determine the affordability and attractiveness of a lease agreement for the tenant, and the profitability and competitiveness of the property for the landlord. A successful lease agreement should have a rent and incentive package that reflects the fair market value of the property, and that balances the short-term and long-term interests of both parties.

2 Term and renewal

The term is the duration of the lease agreement, which can range from a few months to several years. The renewal is the option for the tenant to extend the lease agreement beyond the original term, usually under the same or similar terms and conditions. The term and renewal are important indicators of the stability and flexibility of a lease agreement for both parties. A longer term can provide more security and certainty for the landlord, and more cost-effectiveness and continuity for the tenant. However, a shorter term can allow more adaptability and responsiveness to changing market conditions, business needs, or strategic goals. A successful lease agreement should have a term and renewal clause that matches the tenant's occupancy plans and the landlord's leasing strategy, and that allows for adjustments or negotiations if needed.

3 Maintenance and repairs

The maintenance and repairs are the activities that are required to keep the property in good condition and functionality. They can include routine tasks, such as cleaning, painting, or landscaping, or major works, such as replacing roofs, plumbing, or electrical systems. The maintenance and repairs are essential indicators of the quality and performance of a lease agreement for both parties. They affect the tenant's satisfaction, comfort, and productivity, and the landlord's reputation, liability, and asset value. A successful lease agreement should clearly define the responsibilities and obligations of both parties regarding the maintenance and repairs of the property, and provide mechanisms for resolving disputes or issues that may arise.

4 Sublease and assignment

The sublease and assignment are the options for the tenant to transfer their rights and obligations under the lease agreement to another party, either partially or completely. A sublease is when the tenant rents out a portion or all of the property to another tenant, while retaining their original lease agreement with the landlord. An assignment is when the tenant transfers their entire lease agreement to another tenant, who becomes the new tenant of the landlord. The sublease and assignment are important indicators of the flexibility and liquidity of a lease agreement for the tenant, and the control and security of the property for the landlord. A successful lease agreement should specify the conditions and procedures for the tenant to sublease or assign their lease, and the rights and consent of the landlord to approve or reject such transactions.

5 Default and termination

The default and termination are the situations when the lease agreement is breached or ended by either party, either voluntarily or involuntarily. A default is when one party fails to comply with their obligations under the lease agreement, such as paying rent, maintaining the property, or following the rules and regulations. A termination is when one party decides to end the lease agreement before its expiry, either by mutual agreement, by exercising a break option, or by invoking a legal cause. The default and termination are critical indicators of the risk and cost of a lease agreement for both parties. They can result in financial losses, legal disputes, operational disruptions, or reputational damages. A successful lease agreement should minimize the likelihood and impact of default and termination, and establish the remedies and consequences for each party in case they occur.

6 Communication and feedback

The communication and feedback are the interactions and exchanges that take place between the tenant and the landlord throughout the lease agreement. They can include formal meetings, reports, surveys, or audits, or informal conversations, emails, or phone calls. The communication and feedback are vital indicators of the relationship and satisfaction of both parties with the lease agreement. They enable the tenant and the landlord to share information, address concerns, resolve problems, or explore opportunities. A successful lease agreement should foster a positive and productive communication and feedback culture between the tenant and the landlord, and encourage regular and honest dialogue and collaboration.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?