If you are planning to relocate your office, the first step is to check the lease at your current location.Your lease contains several items which will influence your relocation, or may allow you to renew at your present location. Here’s what to look for:
1) The lease expiration date.
Your expiration date will usually (but not always) drive the timing of your relocation. Ideally, office users should begin their search for new space well enough in advance to allow their tenant representation commercial real estate broker to create a competitive bidding environment. If the space search starts prematurely, however, a business may end up paying rent for an empty office.The best time to start a search depends on the size of the space and the complexity of the deal. Consult with your tenant rep broker to estimate the timing of your search.
2) The possibility of a buyout.
If you need to move before the current lease expires, look to see if the lease permits you to do so by paying a “buyout amount.” A lease buyout is money accepted by the landlord in exchange for letting the tenant escape the lease contract before the expiration date. Since everything is negotiable in commercial real estate, tenants can often negotiate a buyout agreement with their landlord even if a buyout clause was not originally written into the lease. Consult with a tenant representation commercial real estate broker for more information.
3) Staying longer.
If your new space isn’t ready on time – a common problem – you may have to continue occupying your current space after the lease expiration date for a short period.Tenants expecting such a scenario should negotiate a short-term extension of their current lease. Unfortunately, some landlords resist short term extensions when they know that that the tenant is moving. Check to see if your lease imposes onerous “hold-over” provisions which take effect if you occupy the space after the expiration date. Landlords often charge large rents to tenants who don’t leave on time. If your new landlord fails to deliver space on time, ask him to pay for the rent you are charged as a holdover tenant.
4) Options and sublets.
An option clause in your current lease could significantly affect your decision and ability to move.Your lease may give you the option to renew, and perhaps pick up additional space as well.Tenants should also review their sublet rights. Subletting your space will offset some of your current rent costs and may allow you to move sooner.
Businesses considering an office relocation should consult with a tenant representation commercial real estate broker to review the items discussed in this article. For more on the benefits of retaining a tenant rep broker, read Why Should I Retain A Broker to Negotiate My Office Lease? For more on how to find your new office location, read How to Find the Right Office Location in 10 Steps.
By: Troy Golden
Senior Director, SCGroup Real Estate
Email Troy: firstname.lastname@example.org
Visit Troy's blog: http://oakbrookofficereport.org/
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Visit the SCGroup Real Estate website at www.scgroupre.com