Leasing office space in Dubai offers exciting opportunities for businesses, but it also entails significant responsibilities. You can ensure a smooth experience by understanding key aspects of your office lease.
What is an Office Lease in Dubai?
An office lease is a binding contract between a landlord and a tenant that outlines the terms for renting commercial property, namely offices and retail spaces. These leases must be registered with Ejari to ensure they are legally recognised under Dubai law.
Types of Commercial Leases
Gross Lease
The tenants are expected to pay a fixed rent amount while the landlord takes care of additional expenses such as property taxes, insurance, and maintenance costs.
Triple Net Lease
Most of the financial responsibilities are placed on the tenant including the rent, property taxes, insurance, and maintenance costs.
Turnkey Lease
Fully furnished, ready-to-use office space
Fitted Lease
Partially furnished space with basic interiors such as flooring, ceilings, lighting, and partitions.
Lease Terms You Must Look Out For
Rent and Rent Increases
Typically, commercial rents are calculated on a per-square-foot basis. Both the ongoing rent and rent increases that may occur should be stated within the agreement. Rent increases may be a result of:
– Predefined increases during the lease term
– RERA’s rental index
– Sales turnover
– Step rent (incremental increases)
Renewal Terms
To avoid being forced out unexpectedly, you must always negotiate a renewal clause and include a right of first refusal if the landlord decides to lease to another party.
Length of the Lease
Most commercial leases in Dubai are typically for one to three years, longer terms can be negotiated. The lease agreement must clearly state the duration. The lease should define:
– Start and end dates
– Options for renewal
– Break clauses or early termination
– Rights of re-entry for landlords
Maintenance and Repairs
The lease should define who is responsible for maintenance and repairs during the tenancy. Typically, structural repairs are handled by the landlords whereas tenants handle minor maintenance.
Lease Checklist
1. Lease agreements must be registered with EJARI. The contract will be deemed unenforceable in the absence of such registration.
2. You must review additional charges you will amass beyond the rent.
3. Ensure you understand rent increases.
4. Lease agreements stipulate maintenance responsibilities.
5. Ensure compliance with local regulations such as zoning laws and licensing requirements specific to your industry.
Steps Involved in Office Leasing
Leasing involves several key steps:
1. A leasing process starts with choosing a business activity.
2. You should then select the legal structure for your business.
3. Next, register your trade name and obtain initial approval from either the Department of Economic Development (DED) or a relevant Free Zone authority.
4. Your office location must match your license requirements; Office scouting can be done simultaneously.
5. You must define your office requirements primarily similar to most other processes.
This means you should determine:
– Size
– Location
– Budget
– Desired amenities, such as parking and meeting rooms
6. If necessary, engage a broker to help find a suitable space.
7. Cross-verify the market rate through tools like the RERA Rent Calculator.
8. Tour properties, short list, and make an offer.
9. Next, you negotiate the lease with the landlord. Be sure to discuss rents, payment terms, fit-out periods, and service charges.
10. Sign the agreement and register the contract on Ejari to make it legally binding.
11. Finally, activate DEWA and set up internet and telecommunications.
Alternatively, you can also opt for serviced offices where amenities and other requirements are taken care of.o
