What to do if your lease is expiring
Your workplace lease is due to expire in the next 24 months. Should you stay or should you go? Stay put or relocate to a new shiny workplace with a full Category B fitout? This article discusses how you should navigate your lease expiry, focusing on general advice, programme and where your lease expiry sits in the workplace lifecycle. Too often these important decisions are left too late, leading to compromised solutions that can have a massive impact on business culture and your bottom line.
Your first move
There are 5 key questions that you need to ask yourself if you are considering relocating your workplace;
01 - Are you in Scotland, England or Wales?
If your workplace is located in England or Wales, you need to check whether or not your lease specifically states whether your are inside or outside The Landlord and Tenant Act 1954. This legislative framework gives commercial tenants the right to renew their lease on terms similar to or updated from their current lease. This Act does not apply in Scotland however. If you are based in Scotland, it is likely therefore that you have specific terms within your lease to deal with Tacit Relocation, Notice to Quit and Apportionment of Rent. Legal advice should be sought.
02 - When should you start thinking about your renewal?
18-24 months before lease expiry. Anything less and your decision or leverage will be compromised by time. Plan ahead to allow for negotiation of new terms or to search for new premises.
03 - Does your current space support your business goals?
Your workplace is a tool to realise your business goals. Is it working? Does it meet your objectives? Would a refurbishment or relocation better serve your future requirements? What would be the impact on your workforce?
04 - Can your current space accommodate growth?
Commercial leases tend to be between 5-10 years. For larger premises this can extend to 15 years. This is a significant length of time for a fast growing business. Therefore, you need to ask yourself whether your current space will meet future need.
05 - What are the costs of moving?
Exit costs - known as 'dilapidation costs' in the industry - can be significant. In simple terms this is the cost to return the space to the condition that it was in when you took possession. You will require your own dilapidations surveyor to undertake an assessment of these costs and negotiate with the Landlord's team a mutually agreeable cost. It is important to give yourself enough time, and by extension leverage, to undertake the dilapidations work yourself ahead of lease expiry to optimise your negotiating position.
Who's Involved
Success in business relies on a successful team. Your workplace refurbishment or relocation is no different. At Actum-IF we advise splitting your team into an Internal and External team.
Your Internal Team will require a single point of contact, a Project Leader, to manage the day to day running of the project. This role will take up a considerable amount of time and the individual must be empowered and have the necessary time and resources to successfully deliver the project. Ideally, an individual who is open minded and aligned with your business goals and culture is the perfect candidate. Next, assemble your Project Team, made up of individuals from each department so that all aspects of your business have their needs and objectives represented.
Your External Team is also important and extensive. As a minimum you should be looking to engage the following;
01 - Workplace Consultant to understand how you use your workspace to optimise culture, space efficiency, productivity and well being.
02 - Commercial Agent to understand the current market and intelligent forecasts for the future.
03 - Dilapidations Surveyor. Knowing and understanding the costs of your move at an early stage will improve your negotiating position.
04 - Current and Future Landlord. You need to understand your current landlord's plans for the future of the building and ensure that these align with your business objectives. Or, if you are relocating, opening an early dialogue with future landlords will ensure that you negotiate beneficial terms for your new lease.
05 - Legal Team. Perhaps the most important. Commercial Property transactions are onerous, complicated contracts that can have a massive impact upon your business. Seek legal advice early.
At Actum-IF we have inhouse expertise to assist with the design of your workplace and the costs of moving. We are also happy to introduce Clients to our trusted Commercial Agents and Solicitors that we work with regularly should this be required.
Project Timeline
As mentioned previously, we would advise starting the process of considering a workplace move 18-24 months before lease expiry. Below we have outlined a broad list of milestones for your Project dependent on whether you Stay or Go that you can use to draft a generic Project Timeline.
The refurbishment or relocation of your workplace is a significant event in the life of your business that has a huge impact upon the success of your enterprise. It is a vitally important tool that must be optimised to ensure an efficient workplace that empowers staff, clients, productivity and well being. The end of a lease term can be a daunting time for a business, but it can also be a tremendous opportunity to energise the business and prepare it for an exciting future. Professional planning at an early stage is vitally important to ensure a successful transition of workplace for your business.
Thank you for taking the time to read this article and we hope that it has been helpful. At Actum-IF we are here to help. If you are approaching the end of your Lease Term and are considering refurbishment or relocation we would be delighted to help in whatever capacity you feel would be appropriate, simply get in touch by clicking on the link below.