Think ahead to ensure you're located in the best possible property for your business.

The issue of commercial property can often slip off the agenda for many businesses, but it’s essential that companies regularly review their property requirements and lease events. The trick is to think about what your future business needs will be in relation to your property requirements and not lose sight of it, as everyone is caught up with their day job.

Finding and reviewing suitable office space to operate from is something that many businesses have to go through – some, on numerous occasions. The prospect of leasing, buying or building an office can also seem daunting, but it doesn’t have to be.

Considerations

The key, when thinking about relocation and expansion, is to consider all occupational costs. Rather than simply restricting your decision to the headline rental, in order to provide a more accurate assessment other costs should be considered, such as service charge, business rates, car parking and running costs. Increasingly, occupiers are considering a building’s green credentials when evaluating suitable properties.

One of the most important areas for occupiers is a need to be aware of is lease break options. This is a provision (usually, but not always) granted to the tenant that allows them to end the lease on a given date, subject to certain criteria. It’s common for breaks to be included at agreed points within the term of a lease. However, the presence of breaks may reduce incentives available to the incoming tenant or require a penalty, such as a one-off payment to the landlord. Tenants should, therefore, carefully consider how likely it is that they will require a break clause, as they will be in a position to negotiate a better incentive package at day one without a break.

Assuming a break clause is agreed, these are the dates that businesses should work towards when assessing their occupational requirements in order to avoid occupying unsuitable, potentially expensive space in the medium to long term. Just keep asking the question: what will my business needs be at the date of the next break option? And, whatever you do, don’t forget when this will occur. There are many instances where lease agreements are filed away, the break option notice period comes and goes, businesses realise that their current premises are not fit-for-purpose, and they’re tied into the full agreement.

Made to measure

The lack of office space, combined with steady, if unspectacular, levels of stock absorption, will increase the demand for design and build (D&B) accommodation. The shortfall in high-quality existing stock means companies with medium-to-long-term lease events, such as break clauses and expiries, should be considering their options now. This will ensure they acquire the right space in the best location, rather than being forced to take space that is inflexible and inefficient, simply because it is built and available.

Purchasing or leasing space off plan allows an occupier to influence the finalised specification and design so it meets their specific needs. In addition, there is a significant time/cost-saving when it comes to ‘fitting out’ the space, as these works can be absorbed into the overall construction programme. The typical lead-in period for Grade A offices is 12 to 18 months from legal commitment, assuming that planning permission can be secured.

In addition, new premises are highly energy efficient, resulting in a reduction in running costs – a critical and often overlooked financial consideration associated with renting commercial premises. The market could enter into 2013 with little built supply over a certain size requirement. As a result, companies that are considering relocating in the next 12 to 18 months should begin the process early and start reviewing their requirements.

Businesses are realising that there simply isn’t the level of quality commercial property that they’ve been used to in the past. A shift in the market is imminent and companies need to think ahead if they’re to ensure that they’re located in the best possible property for their business.