If you are a tenant that occupies commercial property and your lease is nearing expiration, the following tips will help you when making decisions regarding your commercial lease.
- Review your options early. A lease that includes an option to renew the term typically requires a tenant to notify the landlord in writing of their intent to renew as early as 6 to 12 months before the lease term expires. It’s up to you to know the details of your lease and notify your landlord on time if you’ve decided to exercise a lease option. If your current lease does not include an option to renew automatically, or if your lease option has expired, you will have to negotiate a new lease to remain at your current location. And if your landlord has already made other plans for your space, you’ll need to secure a new site with enough time to move your operation before your current lease expires.
- Explore the Market. Even if you plan on staying at your current location, it’s worth exploring the open market to ensure you make an informed decision. Reviewing the available commercial space in your area may assist you during any negotiation with your current landlord.
- Assess your future business plans. In this post-COVID business environment, most companies are reevaluating their office needs. If your business plan includes remote or hybrid work options for your employees, you may be able to save money by reducing your square footage. Alternatively, some companies are addressing today’s talent shortage by offering perks like golf simulators, nap rooms, and dining options that could attract new applicants but will also require more office space. Regardless, you should review your business plans with enough time to make a change if your existing location doesn’t have the flexibility to accommodate them.
- Include all potential costs in your analyses. During a review of possible alternate locations, it’s important to include factors beyond the lease rates to ensure you don’t underestimate moving costs. For example, don’t overlook the costs of technology (IT) installations, transporting equipment and furniture, and any contract cancellation fees associated with your current location. Before making a final, you should also assess the potential impact that moving could have on your employees: Being forced to work through extensive renovations, for example, or having to manage a longer commute could negatively affect employee morale, making a move less beneficial.