When it comes to an organisation deciding to move offices you can be sure that an assistant will be involved in the process at some point. If you have never moved offices before it can be a daunting task mainly because there is so much to think about but also because everyone else in the office will want to know what is going on and if their new desk is next to a window. I have managed an office move before, and it is hard work. Here are their top 10 tips to consider when contemplating an office relocation.
Contemplating an office relocation
- Identify the real reasons underlying the decision to relocate. This may be driven by a ‘lease event’ (lease expiry or break option) on existing premises, and these don’t always come at the right time. You may be rattling around in too much space or bursting at the seams with nowhere left to expand. The location or image of the building may be tired to the point where staff and clients are reluctant to walk through the door.
- Consider the optimum location for your business in terms of access to customers, workforce and future recruitment, competitors and profile of the company. Examine the make-up of your workforce and how many are in the office at a given time. Does this present an opportunity for a change in working practices towards desk sharing?
- Examine and challenge current practices in terms of density standards, private offices, under-utilised meeting areas, together with the quantity, format and location of filing and stored materials.
- Challenge the need to relocate at all. Office relocation is expensive. Is there a better solution? In approaching a ‘lease event,’ you should engage with the landlord to explore continuing your occupation on acceptable terms. They may be considering or open to persuasion to brighten up the common parts of the building. There may be expansion space becoming available, or if you need to offload some space, there may be the opportunity to do so by surrender or sub-letting. Refurbishing office floors while remaining in occupation presents its challenges, but it can be done with proper planning. These different permutations should all be actively explored.
- If the exercise is driven by a ‘lease event’ at your existing property what intentions does your landlord have? In other words, you could be pushed before you jump. If there is a lease expiry or a break option which is mutual the landlord may have ambitions to redevelop the building and will push for vacant possession. In some circumstances, you may be entitled to compensation.
- If a break option in your lease is presenting the opportunity to relocate it is essential that you take early advice on the conditions that may be attached to this. Modern lease drafting is generally more tenant-friendly, but there are still break clauses in many older leases that are beset with pitfalls which with careful management can be avoided. In any event, a valid break notice has to be prepared and served as stipulated in the lease.
- Take early advice on budgets that should be allowed for different areas that may be under consideration. Rent and business rates are generally the two most considerable recurring overheads, and these may vary significantly in different locations according to market conditions. Furthermore, up-front incentives in terms of rent-free and fit-out allowances will vary. Service charge costs are the other main recurring expense and as a variable cost can be the most contentious.
- In addition to the recurring overheads on the new property take early advice on the one-off costs that should be anticipated. As mentioned office relocation can be expensive. There may be a dilapidations claim (repair and reinstatement) or exit penalty to consider on the existing property. To plan a smooth transition from old to new a short period of double overheads may be unavoidable but can usually be offset by rent-free incentives on the new property. In any event, provision needs to be made for agents acquisition fees, legal fees, possible further survey fees, stamp duty land tax (SDLT) on the lease, fit-out costs and supply of furniture, telephony and IT installations. The VAT will be chargeable on much of this, and the ability to recover should be taken into account. A new company or one perceived as a risk may be required to provide a rent deposit or personal/bank guarantee. The physical move from old to new building needs to be planned, and the cost of updating all marketing and branded material needs to be taken into account.
- Allow sufficient time to plan and execute the whole relocation process. Circumstances will vary but between 6-12 months should be allowed from start to finish. Depending on the number of individuals involved in the process 2-3 months should be allowed to thoroughly search the market, shortlist and view suitable properties and agree to terms on the chosen option. The method of legal drafting will generally take about two months during which you would also be working up your space planning and fit-out proposals to ensure that you have consent from the landlord at the point where you complete the lease. Allowing for lead-in times on labour and materials a further 2-4 months should be allowed for fit-out works on site along with the supply of furniture, IT and telephony installations.
- If having taken all of the above into account, an office relocation is the chosen solution don’t under-estimate the up-lifting impact this can have on the entire organisation. A bright well-designed office can work wonders for staff morale repaying the organisation in terms of staff retention and ability to recruit. As staff costs are generally the most significant business overhead savings in this area can be substantial. Furthermore, customers and staff from other offices may show a sudden willingness to come and visit you in your new home.