During these times of economic uncertainty, moving offices can be a major upheaval for any business and, if the wrong acquisition is made, strategically disastrous for the individual business concerned. One of the greatest tests for any business when acquiring new premises is in forcing consideration of how the company may be expected to grow over the next few years.
Here are some of the aspects Alpha Browett Taylor believe key points you need to consider in any such venture:
Transport Links and Local Amenities
If one of your principal concerns is to retain key people, you may wish to retain proximity to existing transport links/travel arrangements and local amenities such as shopping and leisure facilities. Remember it can be not only expensive to lose existing staff but equally costly to hire new staff. Taking a contrary view, if it is your intention to grow the existing business and to recruit new staff, adequate transport links and good amenities in the local vicinity will be equally important.
During the last 10 years, landlords have been encouraged to offer leases drafted in accordance with the Commercial Lease Code. Not all landlords offer such leases, but given the industry’s support for the Code to be adopted where possible there would be much benefit in testing this during the course of negotiations.
It is critical in any new move to plan through the impact of disruption which such an operation may otherwise involve. This necessitates close liaison with IT and telecommunications advisors and addressing the teething problems of working from a new location whilst your staff have a need to “find their way around”.
The End of the Lease
Beware of the potential for a claim for dilapidations by your Landlord. Remember that if you take out a full repairing and insuring lease, it implies an obligation not only to keep in repair but to effectively “put” in repair the premises you are leasing. That can translate into a significant capital sum at the end of the lease, not only to carry out repairs but also to remove alteration, which you may have undertaken during the course of your tenancy, whether the work is actually undertaken nor whether it is converted to a damages claim by your Landlord.
Be conscious of the cost of occupation. If you occupy part of a building the Landlord may have an obligation to undertake works and provide services such as heating, lighting and refuse collection for example to the common parts, but inevitably these are likely to be paid for through the service charge. Be careful as to the list of items which the Landlord can actually include within the service charge and where possible, seek to negotiate a limit on your liability by way of a maximum annual payment.
Need Greater Flexibility?
If you need more flexibility than the traditional marketplace can provide, then perhaps the alternative is to consider serviced offices which allow your business to upsize or downsize according to movements in the flow of business. This is far from being the cheapest option given that the providers charge on a fully inclusive basis but does give you much greater flexibility. The latest variation on this theme is that of the shared office. (Not always acceptable to most institutional Landlords) but one which does provide the advantage of pooled office costs in respect of a certain area.
Rent Free Periods
Never be afraid to ask for a rent free period whether you are acquiring a traditional lease or even leased serviced offices. It can provide a useful cushion and be of benefit in assisting the cash flow at a time when many other overheads seem to be out of control!
The Time Factor
You might allow up to a month to identify and make an offer on the right property and two weeks thereafter to negotiate acceptable terms for the acquisition. In addition to this, there is likely to be between six to eight weeks of legal process whilst the necessary due diligence is undertaken. Admittedly, it can be done a good deal quicker than that but that is often down to the speed of transaction required and the goodwill between the parties involved.
Alpha Browett Taylor are a leading independent real estate broker in London providing a broad range of services across the full spectrum of the commercial property markets.