The COVID-19 pandemic changed how we work, making hybrid schedules and remote working the new norm. This cultural shift created a new work environment for organizations to contend with, and if they have not already done so, they very well may need to reconsider their office space investment. An organization’s office space investment is fundamental to the success of your business. Assessing this type of investment can lead to a reduction in space needs and trigger a potential office move. An office move is no small undertaking. As director of operations at Selden Fox, my recent experience orchestrating our firm’s office move demonstrated the need to truly appreciate the process that is undertaken when the possibility of an office move is being explored. Here are some key milestones and considerations involved when an organization initially decides to consider the potential of an office move.
Office Space Requirements
One of the first steps in exploring an office move is to assess both current and future office space requirements. This has been difficult in the post pandemic uncertainty of where our workforce will be working from. As we cannot forget, just three years ago nearly 100% of your employees were working from home, today any number of your employees work from home depending on our business and the organization, or the number of employees in the office varies significantly from day to day. With this in mind, the flexibility of space is a key element to consider. The other factors to consider are the number of employees and your potential growth over the life of a lease, meeting space needs, common areas, storage areas, parking, etc.
Many commercial real estate brokers have software to help turn your space needs into space programming. Conducting a survey of leadership and/or all employees on their needs and preferences can help assess what may be needed in a new space. These survey results help establish space programming for your office that would point to the total square footage needed, office and desk needs, storage needs, common area needs, etc.
Budget Considerations
Often working hand-in-hand with space requirements, you need to work early on with your leadership to establish a budget for office space if you are venturing into new office options. Here you need to consider ongoing monthly rent and additional costs such as utilities and assessments, as well as insurance and tax implications for the new space. It is also imperative to assess the initial investment in renovations and moving costs. It is crucial to consider both short-term and long-term financial implications for your business and your organization’s cash flow considering what tends to be significant upfront costs during the move.
In today’s environment, organizations are often deciding on less space with better location, more technology, high quality furnishings, etc. so the trade off from existing space can often be a wash on the monthly economics. The upfront cost of the actual move is where the greatest investment will take place and often in a short time frame, so the organization needs to plan on the potential impact to cash flow.
Location, Location, Location
An analysis to identify potential locations that align with your business goals, employee accessibility, and client base is a must have. Evaluate factors such as proximity to transportation, amenities, competition, target market, and the overall image and reputation of the area. Depending on your business, the topic of location may be easy or extremely difficult to navigate.
Market Survey
With space requirements, budget, and location in place, it is time to conduct a market survey on what is available, where, and at what cost. This thorough market research will help you understand current rental rates, lease terms, and trends in the areas you are considering. This information will help you negotiate favorable lease terms and make well-informed decisions.
Office Space Search and Evaluation
With market survey in hand, you can engage in a property search to identify available office spaces that meet your requirements and align with your budget. You can utilize commercial brokers, real estate websites, or local listings to explore options. With your search or that of a broker, you can narrow down a list of potential office spaces to visit and assess their suitability based on your established space program. As you view spaces, evaluate factors such as layout, infrastructure, security, amenities, the overall condition of the property, and the amount of reconstruction or redesign which may be needed to fit your needs.
With a few top picks in mind, if any or all will involve redesign/reconstruction, work with an architect to develop space plans for those top picks and also have a contractor prepare a rough estimate of construction expenses. This is essential to clearly understand the costs and be able to truly compare the economics of the different options. The expenses of the architect can potentially be part of your lease terms at the expense of the landlord in some situations.
Lease Terms and Negotiation
After a rigorous search, you finally picked your new office space. Now it is time to review the lease terms and conditions, including the duration of the lease, rental rates, escalation clauses, maintenance responsibilities, renewal options, and any special provisions. Negotiate with the landlord or leasing agent to secure favorable terms and concessions if possible.
Given the continued state of the commercial real estate market, there are many concessions to negotiate. Consider rent abatement options, and concessions and allowances for reconstruction and redesign. A commercial real estate broker can bring to the table the knowledge of what is currently being accepted, offered, and negotiated in the market.
Legal and Financial Due Diligence
It is imperative to engage legal and financial professionals to review the lease agreement, ensuring compliance with local laws and regulations. Conduct a thorough financial analysis, including the cost-benefit analysis of leasing versus purchasing, and consider seeking advice from tax experts.
Lease Execution and Move-in
With the lease agreement finalized, you will need to complete the necessary paperwork and fulfill any financial obligations, such as security deposits or advance rent payments. Then there is the need to plan and coordinate the logistics of moving into the new office space—more to come on that undertaking! In a future article, we will explore executing on an office move, including how to best set you and your team up for a successful move through planning ahead and doing as much as you can as early as you can.
Contact Us
Remember, it is essential to take your time, conduct thorough research, and seek professional advice when necessary to make decisions on your office space. At Selden Fox we have professionals who can serve as project managers on endeavors such as an office move or even serve as interim COO if such a need arises. If you are considering an office move and need assistance with this significant undertaking or have questions about the information outlined above, Selden Fox can help. For additional information call 630.954.1400 or click here to contact us.
