As you near the end of your commercial lease, several factors may influence your decision to renew the lease or relocate your business. These may include fluctuations in your staff or finances, plans to break into a new market, or strategies to decrease your real estate portfolio. This is a moment to evaluate your position as a tenant and gather the data you need to make an informed decision when considering to negotiate a more favorable lease agreement or relocate to a new location.
Let’s take a look at how each process affects the future of your business differently:
- Renewing: A common process in a commercial lease agreement generally initiated by a tenant, allowing you to negotiate new terms with your landlord should you choose to remain in your current location. This could include taking more space or downsizing.
- Relocating: Moving your employees and property to a new location and office space, commonly based on the needs of your business and the economics of the current leasing market.
In addition to the factors mentioned above, think about how the decision to renew your lease or relocate your business impacts your employees, business operations and clients. Consider the goals and aspirations of your workforce first, then make a decision based on which action best aligns with the direction of your company.
Benefits of Renewing
When reviewing the benefits of renewing your commercial lease, one of the biggest considerations is that your business can continue to operate with no added disruptions. Additional factors may include researching current market costs and identifying alternative options for flex space and design elements that would benefit the day-to-day work experience for your employees. Choosing to renew your current lease also benefits your lease negotiation position, providing leverage in your favor that may result in lower tenant improvement allowances, but ultimately decreasing monthly rent.
Your best decision may be to renew your lease and modify your existing workspace to meet the changing needs of your workforce, such as the necessity for remote work or a hybrid work model. Change Management experts specialize in constructing unique plans that can support employee engagement both virtually and in-person by evaluating factors that are essential for maximizing the effectiveness of your workforce operations and align with your workplace strategy.
Benefits of Relocating
Relocating to a new office space can further bolster how you innovate your business operations and positively impact employee morale by fostering more opportunities for collaboration between teams. A great example of this is moving to a space that offers employees with different work styles options to perform in both open and private work environments. With the risk of disrupting culture, consider establishing a footprint that best fits the needs of your employees – whether that is an urban location or suburban satellite offices to accommodate new employees and advanced workflows.
Another reason organizations are relocating is to downsize in space. COVID-19 accelerated an already growing trend of working from home, often reducing the need for large in-person office spaces and meeting rooms. We are finding that more organizations are considering to permanently adopt the remote workforce or a hybrid work model, therefore, creating a more flexible work-life balance for employees.
In our recent webinar “The Future Office Space: A Financial, Organizational, and Operational Playbook”, KGO’s CEO shared, “There will be opportunities for cost savings as it relates to real estate and facilities, business travel, and office supplies, but we may also see an uptick in spending on the home office side and technology throughout the office space.”
Deciding to renew your current lease or relocate your office are both major business decisions. If you’re approaching the end of your commercial lease, here are three tips to consider during the renewal or relocation process.
1. Start the process early
We recommend giving yourself 12 months or more from the date your lease expires to consider negotiating renewal or initiating relocation. By starting early, you have appropriate time to negotiate lease options including obtaining more or less space and explore the real estate market to evaluate new locations for your business.
2. Research available options with your Real Estate Advisor
What do other office spaces offer? Besides the rent rate and other economic concessions, are the demised premises you are considering conducive to your new space layouts (as indicated by “test fits”). Are there relevant certifications such as LEED and WELL that are an important criteria? Have you or your partners noticed any trends in your industry that you want to consider as part of your space evaluation?
Visit spaces that would support your organization’s new ways of working and business operations. Then use what you’ve found to compare the value of your current space vs. any potential spaces. Knowledge of how your business has changed is critical in the selection of your space.
3. Hire workplace planning professionals in addition to your Real Estate Advisor
You may discover your business growth requires a move to a larger or smaller office setting. No matter your reason for relocating, hiring a team of professionals to guide you through the planning, coordinating and implementation of your transition gives you the confidence that you’ve made the best decision for your continued success.
KGO’s experts can assess the many components of your business to develop a plan that aligns with your needs, allowing you to focus on business objectives and preparing your team. If you’re unsure how to start the relocation process or have questions about relocating your business, our Relocation Management experts are here to help. Let’s work together.