Click here For most commercial tenants approaching the end of their lease, a “Stay Vs Go” decision will be faced. Many important factors go into this decision and in 2020/2021, there will be even more to consider. COVID has led to a sudden and rapid change in the workplace landscape. There are new behaviours among tenants and their workers – some which will outlive the health crisis and influence “Stay vs Go” decisions for years to come. In addition, the need for most businesses to cut occupancy costs has led them to re-visit their property strategy. Landlords have responded to these changes quickly, adopting new flexibilities in their lease terms in order to hang on to good quality tenants and a steady income from their assets.
When deciding whether or not you should stay in your current premises, these are the key factors you should consider first:
1. Market Activity
Even if you decide to stay in your current space, now is the perfect time to get to know other buildings and owners in the market. COVID has certainly shaken up the commercial property market and conditions, availabilities and incentives have changed since you’ve signed your last lease. More landlords are open to negotiation and you may encounter a higher level of flexibility (both in your current lease and prospective new leases).
2. Your Company Direction
Other than a smooth transition to the new premises, is this an exercise in brand building? Is it a direct response to the impact of COVID on your business? Are you positioning your company for the next stage of growth and operations? It’s important to set key property goals that drive your decision making. Moving will impact every area of your business. A well planned moving project will review each component and operation within the company, leaving no stone unturned. Moving to a new premises can be an opportunity to start fresh in a new location which can be daunting for some, and an exciting challenge for others. Will this project simply be an exercise in logistics, or will you take the bull by the horns and proactively lead the organisation into the next stage of operations?
3. Your People
Now that all children are set to return to school, your workers have a chance to identify what they like/dislike about their physical office. As organisations start to look at how they can support the “new norm”, change to the workplace has become their main approach. Some commercial tenants who would not have considered leaving their office prior to COVID are now re-visiting their property strategy. Many organisations are (wisely) involving their staff in such changes and engaging them at every point of the decision making process. BRM’s Staff Engagement service assists businesses with how to involve their people on “stay vs go” situations. Read more about staff engagement here
4. Where You Are Now
Most businesses have not yet returned to their physical workplaces. As you begin preparing for your company’s return you should assess your current space and determine how well it serves the business’s requirements beyond COVID. Does the current fitout support any recent changes to the company’s structure? Will the building have appropriate measures in place to support a ‘COVID normal’ such as processes that promote hygiene and a COVID safe plan?
The premises that may have suited your company’s needs only a few months ago may no longer work moving forward, especially after a significant period of absence. If you have decided to implement more flexible working arrangements, with more staff working remotely, how does the space support this kind of arrangement? (i.e are the meeting rooms too large if the majority of meetings will be held online?) Another key element of your current premises is your relationship with the landlord. Undoubtedly the focus throughout the pandemic has been on open relationships based on good faith and trust. Are you able to have a fair discussion with your landlord? Have you already negotiated with them throughout restrictions? How flexible are they prepared to be in terms of the lease?
5. The Alternative
If you’ve decided to move, consider all options and how each will accommodate your business goals. In your property search you will need to examine the pros and cons of every workplace and measure those against your current premises. What kinds of opportunities does an alternative premises present in terms of design improvements? Will it allow for greater efficiency and productivity? Does its location suit agile and flexible work arrangements? If the premises has an existing fitout this could also save you in cost, time and workload.
6. The Incentives
Landlords offer either a rent free period or a fitout contribution (or combination of the two) to entice tenants into their premises. The incentive helps tenants cover the move costs, the make good obligations to the old premises, fitout costs to new premises and breaks the catch-22 of carrying the double rent of paying for the occupied office whilst the new office is being designed and fitted out. Incentives are negotiable, vary with the leasing market and depend on the local area as well as the general market. Due to COVID landlords are more likely to offer increased incentives so that their asset’s ongoing income is maintained until a stronger market returns.
7. Who’s Helping You?
Surrounding yourself with the right experts will help you form a strategic property plan that will outline your next steps. Engaging independent commercial property consultants like BRM for the “Stay vs Go” stage of your property strategy will help you make informed decisions that cover the above factors and more. If you decide to move to a new premises, the relocation project will require a number of essential consultants, together with some additional providers who can make the process run smoother.
Don’t face this decision alone. Let BRM’s team of independent commercial property consultants guide you through the next phase of your commercial property journey. Contact us now for a chat.
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