Top 10 tips to decide if you should refurb or relocate?

The end of a commercial lease is the perfect opportunity to review your business plan and future growth trajectory before committing to a lease extension or embarking on a search for a new workspace. Although the global pandemic has given more options for a flexible approach, the majority of lease agreements remain as 3, 5 or even 10-year commitments, and therefore, taking time to assess the future business vision is essential.

A commercial lease expiry can be costly without the proper preparation and advice.

These are our top 10 tips for deciding whether to stay or go:

LEASE RENEWAL

REVIEW YOUR LEASE AGREEMENT - There is no guarantee that your lease agreement contains a renewal option, however, if it does, new lease terms will have to be negotiated. A notable challenge is that if the landlord knows that you are running out of time, they will have the upper hand in negotiations.

GET AHEAD OF THE GAME – Your lease agreement may require a notice period of 6-12 months, regardless of whether you intend to renew or vacate. Therefore, early research and lease negotiation is imperative to allow investigation into other options should the terms be unsuitable.

TEST THE MARKET – If you identify alternative spaces, consider how the new lease compares to your existing lease. Engage with a tenant representative to review building option rental rates, vacancy rates, and potential landlord incentives to see if it presents a better option for your business.

AVOID UNCERTAINTY – If you have left the decision too late and entered into a rolling contract with the landlord, you must be aware that if a permanent tenant is found, you could have as little as 1 month to vacate and find new premises (never mind organising the logistics of a business move).

RESOLVE INTERNAL CHALLENGES – A relocation is an ideal opportunity to assess business, both from a growth and development perspective, as well as address any internal challenges around culture, employee engagement and how teams interact. A new workplace can be a positive move to reinvigorate the team and improve well-being and productivity.

THE FUTURE OF WORK – Many businesses are currently struggling to attract employees back to work in the office following a long period of remote work. A new environment will undoubtedly improve the attendance level by implementing a layout that supports each department's specific needs with various work settings to suit their ways of working. An office that promotes social interaction and enables effective team collaboration will again attract employees back. A top tip is to make the whole team part of the journey and allow them a voice on what they want and need in a new office.

INNOVATION & TECHNOLOGY – A workspace can look the part, but that does not mean that it necessarily supports the business operations fully. A key element of any new fitout is the integration of technology. Not only will it allow the business to support hybrid working, but can positively affect the way you interact with clients.

LEVERAGE LANDLORD INCENTIVES – With higher vacancy rates following the pandemic, there is an opportunity to negotiate incentives with the landlord who will be keen to lease their space. Incentives can cover rent-free periods, a reduced rental rate that reflects market conditions, and even a fitout contribution as any improvements that are made to tenancies will raise the overall value and attraction of their building.

Talk to us now about your lease expiry, we’re always happy to guide our clients on the best solution.