Is your office lease renewal fit for the future of work?
There’s nothing quite like the smell of a fresh coffee pot as you walk into work. Sure, someone forgot to change the filter, but caffeine is caffeine. Now, where’s that sandwich you left in the fridge?
Plenty of aspects of office life are comfortably predictable, but one that could catch you by surprise is the expiry of your office lease. You never want to be forced to make a huge change you didn’t ask for, so it pays to be prepared for your office lease renewal.
Here’s our guide to help you tread this tricky terrain.
Things to consider when your office lease is up for renewal
If your lease expiry is looming – you’ll likely fall into one of two camps:
- Super prepared: You’re way ahead of the game and planning for all eventualities, knowing that’s how you’ll get the best possible deals and minimize unnecessary surprises (you smart cookie).
- Pressed for time: You knew the office lease expiry was coming, but planning for an uncertain future didn’t feel right for you – a decision you stand by. But now you need to make some important choices, fast.
How many employees you have, the size of office space you need, and the complexity of your current commercial lease agreement all impact how the process is likely to go. That’s why it’s advised to start planning at least 15-18 months before your lease expires.
But this decision-making process isn’t as cut-and-dry as it was a few short years ago. The habits and expectations of your workforce are changing. The way you use office spaces has changed, or at the very least, is up for discussion. You won’t simply sign the same lease again without researching how your new agreement can best meet your changing needs.
That doesn’t mean you can’t reap the rewards of forward-planning, but getting this right requires a focus on workplace strategy – planning, designing, and managing a productive and supportive environment centered around employee health and fast-moving economic progress.
Your people expect your workplace to become more supportive, innovative, and agile. That includes, where suitable, enabling flexible hybrid working. That’s how your office can evolve to deliver a tangible ROI that’s fit for the future of work.
Wherever you are with your renewal, here’s what you need to know:
- With no lease option in place, your landlord doesn’t have to renew.
- The usual notice period for renewal is 6-12 months.
- It’s best to have plenty of time to establish the details of any new lease – rushing this process gives the landlord more negotiating power.
- You could stay on after your lease expires on a monthly holdover – but as the landlord can serve you only one month’s notice to leave, this is very risky.
Should I stay or should I go?
If renewal is an option, this is the biggest question you face. To decide if your current space is still a good fit – you can ask the following questions:
- Are you happy with the office and location?
- Are you likely to outgrow the space any time soon?
- Is there enough flexibility to meet your newly established workplace strategy needs?
If you said yes to all three – a renewal is likely to be your most attractive option. The cost of office relocation will of course factor into your decision. You’ll need to consider planning, fit-out, ‘make good’ costs, moving expenses, and any potential loss in productivity. You can weigh these up against the benefits of moving someplace new e.g. lower overheads, a better location, and greater flexibility. Then there’s the cost of the lease agreement and how it’s delivering value compared to the market.
For bigger upheavals, a change management consultant may help you ensure a smooth transition with minimal disruption for your workforce.
Getting a great deal
If you choose to stay, you’ll want to come to an agreement that pays off for your company and complements your workplace strategy. Landlords are very motivated in the current market to offer top dollar for improvements that you and others will be attracted to. It’s in their interest to keep you in their space – something your real estate broker should be keenly aware of.
Up for negotiation could be building improvements, better interiors, first offer rights for local space as you grow, contraction rights where less space may be needed, greater flexibility in general, and much more.
Your priorities here will largely depend on your business goals, so you’ll want to consider the following:
- What are your growth forecasts over the coming years?
- Do you anticipate more hybrid or remote working? How does this impact the way space will be used and how much is needed?
- Does your workplace strategy complement your business goals e.g. making it easier to hire and retain staff, and minimizing costs.
Need help navigating the new?
Wherever you are with your renewal, a new lease symbolizes a new start. And given how different the world is since Covid-19, it’s likely right on time.
With so much to consider – why go it alone? Our workplace strategy experts, change management consultants, and vast network of quality brokers can help you proceed with total clarity. We’ll tell you whether renewing your lease or moving on is in your greater interest, advise on how to maximize your tenant improvement allowance, and even create a fully personalized workplace strategy to make the most of your space.
We’ve helped hundreds of local companies elevate their businesses through design, innovation, and strategy.
For a free, informal chat – give us a call.