Whether you are in the market to relocate your office, to open a new office or even to renew your lease, it is critical that you start early. Far too often, we get calls from tenants that have leases expiring in three months or they would like to open an office with a target date of 30 days out. For many, that would seem to be a sufficient amount of time. Leasing an apartment? Sure, it’s ample. But leasing office space is an entirely different story. Starting early will ensure that you get the best terms, find the right space and ultimately, save you money, and most likely stress!
Like it or not, leasing office space entails a negotiation and negotiations are all about leverage. If you approach your landlord with 30, 60 or even 90 days left on your lease, there’s a good chance the deal terms will be in their favor since they know it’s nearly impossible to find new space in that time frame. Ideally, you should be looking for space earlier than your option notice period, which you’ll find in your lease. This period of time will vary from owner to owner but it’s typically six months to a year and nine months. If you’re renewing, you’ve created leverage with your existing landlord because they know you have enough time to find an alternate space. If you’re moving, you’ve created leverage with your potentially new landlord because they know you aren’t under the gun to make a decision.
Missing your notice period
If you miss your notice period, you’ll lose any renewal rights that were listed in your lease. Further, if you haven’t responded to your landlord’s attempts to renew your lease, it will be all the more reason for them to start marketing your space. So, while you’re under the impression that you’re going to stay, your landlord has other plans and there’s a good chance they might lease the space out from under you. Starting early will assure you’ll have a home for the foreseeable future and will give you the proper leverage when negotiating. Especially if your landlord catches wind that you’re out looking at space. Otherwise, you’ll either be forced to move or to agree to unfavorable lease terms.
Touring the market
Whether your desire is to relocate or renew, it’s crucial to the process to tour the market before your lease expires. Market conditions will have changed since you signed your current lease and there might be better space and lower rents than what you’re paying. Additionally, when owners and brokers catch wind that their tenant is looking at space prior to their notice period, it creates a need for them to negotiate fairly, otherwise they risk losing your tenancy.
There are other reasons to start early as well. You might want to design a new space that entails going through the design phase, permitting and construction. Or you might have a 200% holdover clause in your lease that you aren’t keen on paying. Whatever the reason, it’s in your best interest whether renewing, relocating or opening a new office, to start early! Your first step is to engage with your real estate broker to discuss current market conditions. So what are you waiting for? Get going!
Vinny is Senior Managing Director of Colliers International in Princeton. He specializes in the acquisition and disposition of office space, and he is focused on both tenant and landlord representation.