Thinking of Moving? Ask Yourself These 6 Questions First.
Choosing the right space for your company is about more than just finding a place to do business and greet your clients.
The clear winners not only lock in great space at prices that work for their business, but also create work environments that reflect their culture, ethos and values. This can bring about extremely successful results, including staff members working more productively and companies retaining talent.
There are several key questions you need to ask when trying to decide whether to relocate -- the most important one focusing on whether the move is really warranted -- or if there are other alternatives you should be thinking about. So what exactly should you ask yourself before you commit?
Do I really need to move? Often, companies jump to a relocation before giving adequate thought as to whether they can stay in their existing space.
A relocation often costs more (and is more disruptive) to an organization than a simple upgrade or modification to the existing space. I always push clients to first fully assess what renovations can be done to the existing space to meet the long-term needs of the business.
Remember, living through a renovation can be difficult on your ongoing operations, so make sure you factor this into your decision making.
Does my space reflect our company’s culture and brand? The commercial real estate industry has been redefined as a result of technology, lifestyle and work habit changes. Companies need to embrace these changes and recognize the importance of having space that reflects their brand, values and culture. Space isn’t just a building, carpets or cubicles, it’s a place where collaboration occurs and best practices are identified.
Am I spending too much money -- and unwisely? Some people mistakenly think that a growing rent bill is the sign of a growing company. I know from experience that many growing companies actually need less space (and expense) rather than more space, taking into consideration the newest trends.
For example, in a recent lease in San Francisco for BDO, a booming accounting and consulting network, we reduced their per person footprint by over 30 percent, allowing them to fit significantly more people in less space while adding additional collaboration and support space. For a company that helps other companies measure their bottom line, BDO is being wise about its own by using a flexible work strategy that improves employees’ work-life balance, while reducing real estate costs.
Am I avoiding risk? Because of the volatility of our economy, any company signing a new office lease should seek to hedge three potential types of risk:
- Building risk: A change to the building’s ownership or infrastructure that can impact your occupancy. For example, can the technology capabilities of the building change over time to meet your changing needs? Is the new ownership not as “tenant friendly” or less interested in making changes to the building that will maintain it in a first-class manner?
- Market risk: Events in the global marketplace that trickle through to real estate and have an impact on the rent tenants pay. Sources of market risk include recessions, political turmoil, changes in interest rates, natural disasters or terrorist attacks.
- Business risk: The inherent risks within your own business that impact profitability. Will you lose a major client or key employees? Will your product offering become obsolete?
To mitigate these risks in your new office lease, you must clearly understand your ability (or lack thereof) to expand or contract your space over the course of that lease or, in extreme cases, even terminate it. This is especially important if you are considering a longer term -- five or 10 year -- lease.
Does the location support our employees? Seek an office location that is convenient for your employees -- and not just convenient for the company's owners and top executives. I am seeing a shift where my clients are valuing immediate access to intracity transportation versus the traditional importance of proximity to the suburban train hubs. “Bike friendly” buildings are also a big trend in many cities across the U.S.
Remember, too, that convenience is about more than just commute times. For instance, if work-life balance is important to your company, then you could choose a location where there are amenities and services nearby (such as fitness centers, restaurants, yoga classes and “doggie day care”) that support this.
Is time on my side? Many companies underestimate the time required to consider a move, research suitable locations, negotiate a lease deal, and of course, step back and make sure the expense of the new lease fits into the overall business plan and finances of the company. I recommend you start thinking and searching for an office before you actually need it. This will keep time on your side and not rush you into making a decision or not being able to consider certain alternatives.
I always recommend finding an experienced commercial real estate broker who doesn't have the typical conflicts of interest commonly found in the industry. You can determine this by asking him or her if their company also represents the building landlord.
At the end of the day, a good lease deal needs to be a combination of economics and culture. If you look at each in a vacuum, a mistake is going to be made.