Commercial leases: How startups can secure favourable office rent
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A carefully negotiated commercial lease can give a Nigerian startup financial flexibility and clarity on landlord and tenant responsibilities — but founders must look beyond the advertised rent, property experts advise.
For a startup, signing an office lease is about more than finding a suitable place to work; it can become one of the business's biggest recurring expenses. A poorly negotiated lease can tie up valuable working capital and leave a growing business paying for space it no longer needs, while a carefully negotiated agreement can give a startup greater financial flexibility and clarity about what the landlord and tenant are each responsible for.
Before making an offer on commercial space in Nigeria, founders should compare similar offices in the same area, looking at size, facilities, accessibility, security, parking, power supply and other features that affect rental value. Speaking with several agents and inspecting different properties can reveal whether a landlord's asking price is reasonable, rather than negotiating based on the assumption that the rent is too high.
Experts also advise tenants to look beyond the headline rent and consider the total occupancy cost, since a seemingly affordable office can become expensive once service charges, security fees, waste disposal, water, parking, generator costs, maintenance and other recurring payments are included.
Payment structure matters as much as the amount: a landlord may prefer several years' rent paid in advance, but a startup may need that money for salaries, equipment, marketing and inventory. Founders should negotiate a payment structure that leaves enough working capital, and should seek break clauses that allow the tenant to end the lease before its scheduled expiry under clear conditions.
Lease agreements should also address rent review provisions — when rent can be reviewed, how the new amount is calculated and whether increases are capped — as well as service-charge breakdowns, responsibility for repairs including structural, plumbing, electrical and roofing work, and what activities are permitted on the premises, particularly for businesses that receive customers, store goods or operate equipment.