Posts tagged: serviced offices
Many occupiers either new to the market or looking at expansion perceive the act of moving into a new office is an easy process as simple as packing up your old office one day and moving into the new one the next. The reality however is very different and there are many common pitfalls that are easy to fall into.
1. Finding the right office – the trick is to look everywhere. Not all offices are marketed widely and speaking to one agent will not get you an accurate feel of the market. Be prepared to invest a lot of time in this process. If you do not have the time, appoint an acquisition agent to do the leg work. They will typically have good local market knowledge and potentially access to properties and deals that aren’t widely available to the public.
(photo by mediamolecule)
2. Negotiate lease terms 1 – I would suggest not putting all of your eggs in one basket and negotiating on two or three different properties. Every landlord has their own priorities and if they know there is competition for enquiries this can act as an effective negotiating tactic and can result in numerous tenants’ incentives or rental reductions.
3. Negotiate lease terms 2 – there is more to a lease than the bottom line rent. Look at service charge budgets and consider agreeing a cap. The rent review clause requires specific attention as does the mechanism for activating any break clauses and the repairing obligations which represent typically one of the larger costs to tenants. Every clause has its importance within the lease and it is essential to scrutinise each and every one.
4. Negotiate lease terms 3 – only sign a lease for the time you predict you need a property. If you are planning on growing quickly then a shorter lease will allow flexibility or consider a larger size office that will give you that space. If landlords are insistent on longer terms then try and insert a break clause that suits you. Look at the sub-letting and assigning clauses, you may want to get rid of your lease at a later date. Legal and/or professional advice is strongly recommended on these points.
5. Consider serviced offices – once the domain of new start ups, they are now part of the flexible working culture adopted by many companies. The advantages of paying just a single bill and having reception and meeting room services together with flexible work space can be invaluable. Many providers such as Regus are currently offering very competitive rates that make these genuine options for many SME’s. When considering the cost of a property look at all of the operating costs including Business Rates, service charge and utilities as the actual cost of occupation is very different to just the rent.
Photo Source: CubeKing
6. Legal representation – this is a corner that cannot be cut. Ensure you have a good solicitor who can keep to timescales. Too many times have tenants been left in an awkward situation as a result of the lease taking many months to complete when they assumed it would be a matter of weeks. Be realistic about how long this will take.
7. Fitting out your new office 1 – this is a cost which is almost always greater than budgeted for. Office furniture can be acquired second hand relatively inexpensively but, from first hand experience, you get what you pay for. Better quality products will last longer and keep your staff happier. There is nothing worse than an uncomfortable office seat that an employee will be sitting on for 7 or 8 hours a day.
8. Fitting out your office 2 – consider employing a space planner. There are many companies who will draw accurate space plans and assist with fit out and timings. This is highly advised/essential on more complex fit outs. It is also worth speaking to your landlords, they may be able to provide this service and fund it, saving you a costly capital outlay in order for you to repay it as an additional rent over several years.
9. Accept paying two rents – unless you broker a good deal on rent free you are likely to end up paying two rents as your new office is being fitted out and your current lease is still on going. Take this into account when looking for new offices. It is not just the time you need to allow for searching, negotiating and signing the lease but also for the fit out and you do not want your business to be homeless for any period of time. Playing it conservative and safe is highly recommended.
10. Enjoy – open a bottle of champagne, share it amongst your staff and toast the next phase in your businesses development.
Author Biography: Tim Denny is a regular contributor to The Inside Edge. He is currently a Commercial Property Asset Manager for the London Borough of Tower Hamlets and has an extensive background in commercial property.
LinkedIn – Tim Denny
Twitter – @tim_denny