LEASE AGREEMENT REFERENCE GUIDE 520: STRATEGIES FOR TENANTS IN HEADQUARTERS LEASES $24.95
STRATEGIES FOR TENANTS IN HEADQUARTERS LEASES
This LARG looks at issues associated with a tenant's negotiation of its headquarters lease. The first article is a checklist for such a tenant that raises a number of items the tenant should consider when it is doing the deal. The Lease Clause Critique analyzes a clause from a lease for a tenant's corporate headquarters providing for exterior signage, building name and special communications gear for the tenant.
The Tenant's Checklist For Its Headquarters Lease
When a large company negotiates the lease for its corporate headquarters, it makes for an interesting exercise. Often, the company will take all or substantially all of the space in the particular building. If the deal is a build-to-suit arrangement, in many cases, the tenant will build more space than it needs and seek to sublease the extra space for a period of years until it can "grow into" such space. If the building is already built, the tenant will frequently negotiate options to expand into space occupied by third party tenants.
Any time a tenant takes the majority of space in a particular building, its leverage in negotiating the business and legal terms for the deal will be substantial. Obviously, the tenant will negotiate the best economics it can, e.g., the lowest minimum rent, the best operating cost reimbursement arrangement, additional options to renew at favorable rents, etc. In that sense, a headquarters lease deal is no different from any other deal that the tenant negotiates as a large user.
However, the tenant negotiating for a headquarters location will probably want special clauses relating to corporate identity and signage for the building, building name, special facilities and landlord services documented in the lease. See the Lease Clause Critique in this LARG for a clause that covers special tenant rights for building identity, exterior signage, and special communications gear.
Corporate Identity Issues
A tenant negotiating for a headquarters location will generally want prominent exterior signage on the building indicating that it is the tenant's headquarters. Unless the tenant is secretive (e.g., an organization akin to the Central Intelligence Agency) or extremely concerned with corporate security, corporate signage will almost always be prominent on the face of the building. In some instances, the focus on corporate security takes priority over corporate identity; for example, during the 1970's after several bombings, bomb threats and public demonstrations aimed at the firms, many large oil companies removed corporate identification from the facades of their buildings. In several cases, the signage was never put back on the exteriors of the buildings.
Factors concerning corporate identity and signage that the tenant negotiating a lease for a headquarters location might wish to consider include: