How to Rent Office Space?
MAY 2023 | LAST UPDATED
UNDERSTAND YOUR OFFICE NEEDS WITH SAVVI
MASSIVE SAVINGS WITH SAVVI OFFICES
WHERE DO WE START?
The first step is to be clear about the property requirements for your business, and the factors that will drive your decision making in the search process. These could be a lease event such as an expiry or a market review, or a business requirement such as a need to relocate, expand or contract.
In most cases, your approach will be to consider the potential for relocation, as compared to remaining in your existing premises. Whether you are looking to remain in your current premises or relocate, considering both options is the most effective way to maximise the probability of a favourable outcome. In the event that you stay at your current premises, this process will ensure that any new lease can be secured on advantageous lease terms.
Your requirements must be made in context of the market, for example in relation to current supply, vacancy rates and incentive levels. It’s important that you have a complete picture of expectations and the likely outcomes.
NEXT STEP?
The next step is to review your existing lease and comment on the impact of the terms, for instance the existence and terms of any renewal options or reinstatement obligations on vacation of the premises. These lease terms will need to be factored into the decision-making process and, in the case of remaining in the current premises, certain clauses that may have been agreed some years ago may no longer be desirable and should be flagged for re-renegotiation, if possible.
It is important to understand that it is only at the stage of lease renewal that you have sufficient leverage to renegotiate undesirable clauses, and that everything is up for discussion at this time.
To achieve this, you should go through the following 5 step processes.
1. NEEDS ANALYSIS
This is a document that is used to understand your current situation and future requirements. It will typically rank your opinion of your current premises in terms of quality and location. The current layout of the space should be reviewed to assess whether it is an optimal fit for your business practice, and to understand what you like and dislike about it. For example, you may comment that you really like the building and the location, but the lift lobby on your floor is dated and could be improved. This information can form part of the renewal negotiations.
2. CURRENT LEASE REVIEW
It is important to review your existing lease to understand the impact of its terms. An appraisal of the lease will detail the critical dates that need to be monitored, including those by which either you or the landlord must take action. For example, if a lease has an option, there will be a notice period in which you will need to inform the landlord that you wish to exercise that option. If the option date is missed, the landlord has no legal obligation to renew the lease.
3. CURRENT RENT ANALYSIS
It is advisable to review your previous three rent invoices, as well as the latest outgoings reconciliation. This will allow you to understand your current rent and outgoings figures and, by comparing these with the market rate, you can ascertain whether you are currently under or over-rented. This will be important when assessing the best option for your at the expiry of your lease.
4. SPACE ANALYSIS
Many businesses use only a simple space-planning tool that provides a high-level overview of your space requirements. Space planners are typically able to reduce your footprint by using space more efficiently, and you should be able to add significant value in this area by discussing what other tenants are doing in the market. The option of reducing footprint may enable you to renegotiate the handback of existing space, or move to a better grade of building in a reduced area at no increase of cost. SAVVI provides access to 100s of best in class providers to help provide your business a more detailed review of your current space by industry, size and building.
As well as looking at the current situation, it is important to understand your head count projections across a three - five-year term. This will ensure you are not likely to outgrow the space during the lease period or actually take too much space. This is also a good time to carry out a utilisation study, to understand how your organisation uses its workstations and collaboration or meeting spaces.
5. TIMELINE
Once you have understood the needs and requirements of your business, a timeline should be provided outlining the process from start to completion. This is a very important guide as it manages risk throughout the process and identifies critical dates for making decisions, as well as clarifying who is responsible for making these decisions.
It is recommended that the process of considering whether to renew the lease or and relocate begins 6 to 12 months before the lease expires. By ensuring you have enough time for the process, you are much more likely to be able to negotiate a better deal than you would if it is left too late and has to be rushed.