As a business owner or management-level decision maker, at some point you will inevitably be charged with one of the most important issues facing your company’s ongoing prosperity and long-term success: where to call “home” for your trusted employees and valued clients. Do you stay in this location and renew your lease, or do you need to relocate?
Your company’s location can be as important as your products or your employees, so it’s essential to consider location when creating growth plans for your business.
The answer to the question, “Should I stay or should I go?” depends on the answers to a few key factors which are determined by your business plan and growth strategy over the next three years and beyond. Your plan should include periodic reviews of your location and space requirements, with a detailed conversation with your broker no less than a year prior to your lease expiration.
Whether this is your first location, or you are growing and need a larger space, or you need a space more in line with your company’s aesthetic goals, start a review of your space and location requirements with a broker sooner rather than later.
In order for you and your broker to make an educated decision on whether you should renew your lease or relocate your business, there are five questions you must ask yourself based on your company’s goals and current business plan.
If the answer to any of these questions is yes, then now is the time to contact a broker and start determining your best course of action.
5 Decision-making Factors to Renewing or Relocating
1. Have I discussed this with a broker?
Talking with a broker is a good first step because they will be able to help you work through the next four questions. A good broker will stay in touch with you throughout the term of your lease and anticipate your options. They can discuss your business plans, ideas, and goals to help determine which is the best direction.
While you should think about the following four questions ahead of time, your broker will be able to answer some of the specifics for you, such as current rent market value, available properties, and options for growth.
2. Are you happy where you are?
The next thing to consider is your happiness with your current location. This could cover a multitude of factors, including:
- Physical location
- Business image
- Room to grow
- And more
If there is even one thing you are not happy with when it comes to your location, discuss it with your broker! They'll be able to provide information about locations that are currently available, and advise you if another space that can better meet your needs.
For example, if you are unhappy with the parking at your current location, bring it up with your broker. They may tell you there is a similar building in your price range that has a parking structure, or ample parking attached to the space. Or, they may let you know that you will not be able to find a space that has the parking you’d like within your price range.
Although you still need to consider if your parking needs are worth a move, by discussing this and other desires and requirements with your broker, you will have a better picture of what is available and what your options are for a new space.
3. When does my lease end?
It can’t be said too often: the time to consider relocation is sooner rather than later. Don’t wait until the month before your lease ends to begin considering your options!
For smaller spaces, a search should begin a minimum of six months before the lease expires. For larger spaces, tenants often begin the process a year and a half prior to lease expiration.
This time frame allows you and your broker to fully realize your business location needs and either find a space that will meet those needs, or potentially renegotiate your current lease.
4. What's my rent vs. market rate? Can I afford it?
As you are examining your business plan, you should also take into consideration the amount of rent you are currently paying. How does it fit into your current budget and your future plans? If you are looking to grow, can you afford a larger or nicer space?
A broker can be particularly helpful with this because they will be aware of current market rents. When you discuss your location needs, your broker should be able to give you an estimate on the rent you would pay for particular spaces, buildings, and locations. A broker can also help you determine if the rent you are currently paying at your location is comparable to market value.
Keep your budget in mind throughout the process and be ready to rule out otherwise desirable spaces that are out of range — even if it's your existing space. In strong markets, rents can appreciate quickly. It's not uncommon for tenants to move instead of renew based only on increased rents.
5. When am I planning to grow?
Finally, you need to consider your time frame for business growth. If your lease is ending within the next year, but you are not ready to grow yet, you don’t necessarily need to stay at your current location.
A broker could help you find a location where you can sublease office space, or a building you can expand into as your business grows. They can also work with your current landlord to negotiate a deal where you can expand in your current space as your business grows.
Just because you might not be ready to grow when your current lease expires doesn't mean you shouldn't be planning for growth in the future.
Now is the Time
If any of these questions is a subject of inquiry for your company, now is the time to consider whether you should stay at your current location or relocate. Even if you think you are not ready to make the decision, it is never too early to get in touch with a broker and start discussing your options.
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