• By Steve Coughlin
• In Uncategorized

Should I stay or should I go?

So it’s that time. Your lease is about to expire and you have a decision to make on whether you renew your current space or take your business elsewhere. Both options have their pros and cons, so how do you know whether it’s time to stay put or relocate? There is no blanket right answer, as a commercial move decision is completely unique to your business. Not to worry though, we have put together a list of pros and cons for you to consider and prioritize in order to help you make a more informed decision.

Lease Renewal

Lease Renewal Pros

Business Continuity

You’ve got a business to run. Taking time out of your day to see, evaluate, and plan for a new space takes your focus away from normal business operations and can drastically affect your bottom line. Renewing allows business to run as normal without as much as a hiccup.

Familiar Environment (For you and your Customers)

Your employees and customers get comfortable in your location, space, and overall feel of your building, especially if you have resided in this location for an extended amount of time. The ability to keep right on with those feelings is a big advantage as there are no adjustments to be made by both those two very important parties.

Cost Saving Opportunities

Your landlord doesn’t want you to go. Through careful lease renewal negotiations, you can drastically reduce costs and add a large percentage of your operating expenses to your bottom line.

Tenant Improvement Allowance

Keeping on with the fact that your landlord doesn’t want you to leave, they will often give you an allowance to customize and upgrade your current space. They do this to avoid vacancy costs that you leaving would force them to endure.

Lease Renewal Cons

Building Depreciation and that Effect on Operating Expenses

Buildings depreciate and green technologies become outdated. Everything from electrical wiring to other key infrastructure pieces may be adding thousands to your operating expenses as these wasteful designs cost more to operate.

Outdated Accommodations

Staying put in an older building may make you forego newer accommodations that were mainstreamed after your current occupancies construction. This can be a big problem when looking to allure or retain top talent if your competitions workspace boasts these upgraded amenities.

Overpay Potential

Without skillful negotiations, your landlord will more than likely attempt to extend your current lease into the next term. This sounds easy and fair, but since the time you negotiated your last lease, the building has depreciated and its position in the market has changed. Be aware of this, and be sure you are getting a fair price.

Settle vs. Custom

Chances are that your business has changed a bit since you moved into your current space. With that said, so have your needs in terms of space, culture, and access to new amenities. Staying put can potentially “work” but it won’t be a space fit for your new needs.

Commercial Move

Commercial Move Pros

Modern Building and OppEx Reductions

Moving will allow you to capitalize on a modern building and modern infrastructure. Most modern infrastructures have “green” technologies and are better for not only the environment but also your bottom line.

Encompasses all business needs

Since your business needs have changed over time, moving gives you the opportunity to check all those boxes and find the perfect space to accommodate your newfound needs.

Cost Savings

Moving gives you the opportunity to capitalize on government and other economic subsidies that can save you thousands from month to month. Skilled research, market awareness and negotiation skills will be your best friends as you go through this stage.

Commercial Move Cons

Time is Money and this takes time

You’re not a full time commercial real estate agent but moving may make you feel like one. Moving takes a lot of time away from your business. Everything from research and due diligence to negotiations must take place. Not to mention, the business disruption that will be seen during the physical move phase can be daunting.

Custom Build out Costs

Some buildings are close, but not perfect. For those “close fits”, some clients decide to customize their space and pump large sums of money into them to ensure it is exactly how they would like. This is a con because it is often not incurred by staying put or paid for by your landlord through a tenant improvement allowance.

Cultural adjustments for you and your clients

Your employees have and are probably comfortable with their route to work. Changing this may push some stress on to your employees due to additions in transit or traffic. Beyond that, your clients will need to adjust for your new location which is important depending on the type of relationship you hold with them. The same traffic and transit adjustments need to be considered for both of these important parties.

Conclusion

Moving can be a great or horrible decision depending on what is important to you and your business. Look over this list when making that decision and understand there is no right answer. If you would like to talk through your options and their respective business implications we would love to chat. Coughlin’s Tenant Only approach ensure that we have no conflict of interest and are soley at your disposal.