DISASTER SCENARIO – LEASING THE WRONG PROPERTY


It is interesting to note that after salaries, the second highest business cost are the rental costs for leasing a premises.

What I would like to share with you, is that I have seen many companies really struggle with their decision to rent, or buy a suitable property.

Can you imagine making the wrong decision and being locked into a 5 year unwanted lease that you cannot exit? This is a disaster scenario that has the potential to cost your business $10,000’s, or possibly $100,000’s over the lease term.

If you are thinking of moving, then now is a great time to plan the move, to ensure the best outcome for your business. Allow plenty of time for planning, together with considering the various property options available.

Perhaps you are time poor, or do not know the commercial real estate market. In essence, you may need to be guided through the fog of the commercial property market.

The following is a list of major items to consider:

Understand your Needs

It is critical to assess your company’s accommodation needs for the next 3 – 5+ years. This will allow for future growth, employing additional staff and flexibility (or contraction). Establish future needs and operational plans and do not be influenced by ‘market hype’.

Also, an important point to consider is what savings and business productivity improvements can be expected - why move?

Running Short of Time

Allow plenty of time so that you are well prepared and not forced to make a hasty decision, or place yourself in a poor negotiating position. Do not falsely rely on the ‘state of the market’ and allow yourself limited options in which to leverage market opportunities.

Be Aware of Timelines – a search process may take 3 to 6 months to complete. For example: If you are considering a new CBD or suburban office building, allow 12 – 24 months, for new building construction, with an integrated fitout.

Test the MarketYou must demonstrate to your current landlord that you are willing to relocate into another property. It is difficult to obtain any leverage in the negotiation process if your current landlord believes that you will stay. Investigate what is available and the current market rents and outgoings, together with incentives available (if any).

Be Objective – Do not make your business decision purely on the best rental deal available. Assess the non-financial considerations, such as the image your company wants to project to clients, proximity to retail facilities, public transport and staff satisfaction. Also, I have seen many tenants paying inadequate attention to building services (air-conditioning, lifts etc.), and technical issues, such as IT requirements.

Future Proof your Business – Not recognising the future. Ensure appropriate strategies are in place for potential changes in business operations. This will assist to minimise any unplanned and reactive changes, and spending in the wrong areas. It will also allow greater flexibility to cater for future business expansion, or contraction.

Summary

The key issue is finding new premises, or remaining in the existing premises at a reasonable cost. Utilising the Navigator Strategy will assist with a methodical and transparent process for evaluating the options and navigating the complexities of change. This will save time and deliver the most appropriate and cost-effective property solution for current and future needs.

CONCLUSION

If you are thinking of moving, then now is a great time to plan the move, to ensure the best outcome for your business. How do you take time out of running a business to do all this as well? Wouldn’t you like an expert to do it for you?

Call the Intercommercial Property Group. They will provide advice, market research and financial modelling to establish a total cost of occupancy over the term of a proposed lease, including leasing incentives. This is ideal for comparing various properties under consideration, saving time and money and reducing risk in the process. This will give you peace of mind, and the confidence to make an informed decision.

We specialise in office, industrial, retail and healthcare property.

Feel free to call me on 0408 129 299 for a brief chat, to obtain a market update, and discuss your property requirement.

M: 0418 129 299

E: pflynn@icpg.com.au

W: www.icpg.com.au

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