Looking for new commercial premises can be an arduous task. The Adviser asked Colliers International’s manager of tenant representation and corporate solutions, Sarah Hughes, for her best tips on managing the search for space. Crucially, she says that while some of these points may sound obvious, these are the issues that keep cropping up again and again with SME businesses:
1. Start the process early: The longer you have to evaluate property options, the more ‘power’ you have during negotiations. We always recommend allocating a minimum of nine months for the entire project for small ﬁrms.
2. Understand your space requirements: Undertake a space analysis to determine your optimal size based on your speciﬁ c requirements. An analysis can be undertaken by a designer, space planner or architect. Even an additional 50 square metres can make a huge difference to your total costs over the lease life-cycle.
3. Thoroughly evaluate the market: One mistake tenants often make, especially when they are looking to renew their lease, is not creating negotiation leverage in the market. It is critical your landlord understands that you have compelling alternatives and that you can and will relocate your office premises.
4. Compare property options on a ‘like-for-like’ basis: What may appear to be the best deal on the surface is not always the case after a detailed evaluation of all cost factors. In some instances, a landlord may not include certain expenditure items in their estimated outgoings during the Heads of Agreement negotiations and this can come as a shock when a tenant receives their ﬁrst invoice. Make sure you have visibility of all costs from the outset!
5. Consider renewal options: A lot of occupiers think of this as a ‘later problem’, however an option provides a tenant a degree of protection in terms of their tenure and legal interest in the property. Without an option, your landlord is not obliged to grant you a new lease over your premises.
6. Build ﬂexibility into your lease: Include expansion rights, space reduction and options to break the lease at certain intervals. Additionally, ensure you have the ability to sublet or assign your lease. It’s often hard to forecast growth (or contraction) with business conditions rarely being static, so it’s important to mitigate potential risk from the outset.
7. Retain qualiﬁed representation: The landlord’s agent has a ﬁduciary responsibility to the landlord and will therefore want to achieve the best possible deal for their client. Who is acting in your best interest? A tenant adviser has your interests as their ﬁrst priority and can ensure the right business decision is made whilst saving you time and money and mitigating any risk.
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