Boost Your Lease Negotiating Power
There’s one simple way to keep the balance of power in your favour on office lease negotiations: Plan Ahead
Whether you intend to move or stay put, getting a head start on your expiry date is smart thinking. And there’s your very first question: should you move or stay put?
- How well does your existing premises meet your needs?
- Is a lease option in place, and if so how favourable are the terms in the current market?
- What are your future plans and how do they affect your office needs?
Staying put often appears the easy option – you save on the hassle and cost of relocation, and you remain in a known location and property. Landlords know this, however, and can use it as a way to secure favourable extension terms at your expense. Even if you’re staying put, start discussions early – at least 12-15 months out from lease expiry.
Being rushed tips the scales in the landlord’s favour. A renewal option often has existing parameters, but depending on the state of the market, there may be room to look for benefits such as fitout upgrades. If you get stuck, don’t be afraid to ask for a month-to-month arrangement, but remember that this means the landlord retains the same flexibility you do: you could be ousted at very short notice.
Moving on? A fresh start presents great opportunity. Get thinking at least 12 months in advance of your lease expiry. Look critically at your current space and ascertain what does and doesn’t work. Talk to staff for a good cross-section of opinions and ideas.
Think about future plans….
- Do you anticipate expansion or contraction of the business?
- Is workplace flexibility important, and if so, do you need as much full-time space?
- Are there storage challenges that could be addressed with more or less onsite capacity?
- Does the business have specific fitout needs, like contiguous floors or 24-hour access?
Whether you are acting on a lease option, renegotiating on an existing space, or starting afresh, there is plenty to consider. You boost your chances of a favourable outcome by getting started in good time, so you’re not under pressure to accept terms and conditions.
And remember, you only do this once every five years or so, but there are people out there for whom fitting businesses into suitable space is a day-to-day event, so don’t be afraid to get professional help. With lease costs ranking high on the list of operating expenses for many businesses, you may save well more than you spend.