When new Houston office space development is planned, building owners may consider searching for tenants who are willing to sign a lease agreement before construction is completed. In Houston, this practice is becoming more common.
In general, one of the few barriers to more rapid development of new Houston office space is an overall lending environment that is somewhat skeptical of new construction. In the city's past, particularly in the 1980s, relatively unchecked and speculative lending led to a bust when these spaces were not able to be filled.
Now, though, more than half of the 3 million square feet of new office space currently under construction in the city has already been leased, according to a Wall Street Journal article published late last month.
Generally, preleasing represents a fair amount of risk, in that prospective tenants may not be able to see a completed space before paying a deposit to secure the location. In addition, it's far easier to plan for a new office space when you can actually tour the space and plan build-outs, if necessary, instead of just looking at blueprints of what the office space is likely to look like.
There's also the issue of timing. What if an office space is not completed by the time you are ready to move your company? You are likely to have already committed to a moving company and other secondary services that are necessary during an office move. Even more concerning is the fact that your landlord may have already signed a new tenant to replace you following your move.
For all these reasons, business owners planning an office move need to have professional legal advice on their side any time a prelease is being considered. These agreements may be less familiar to prospective tenants, so legal advice becomes even more valuable.