Is your business currently experiencing changes to your space requirements? If you’re thinking of breaking a lease to meet your changing needs — whether you’re looking to expand your space, or reduce it, here’s what you should know before you take the plunge.
Reconfigure and sub-lease
The coronavirus has been an unprecedented catalyst for changing how people work. The biggest change being more and more people working from home. With fewer people in the office, many businesses are reconsidering their physical office space requirements. Instead of breaking your lease, it’s possible to reconfigure your office and sublease part of your space.
If you are downsizing your office space, or think reconfiguring the floor plan and sub-leasing part of your space, there are some things you should consider:
- Check your lease agreement: you’ll need to make sure you’re allowed to sublease under your current terms.
- Talk to a professional office fit out company: They’ll be able to help you to plan your new office space in a way to maximise space, both for yourself and your sub-lease.
- Work out the likely revenue: To work out your square metre rate it’s a good idea to research rates for comparable sites or speak to your letting agent.
- Carefully screen your applicants: Not only will you likely be in close proximity to your new tenant, but you’ll want to make sure they can pay the rent, won’t be too disruptive and will look after the space too.
Get out and sub-lease
If you’re keen on leaving, sub-leasing the whole space can be a great way to exit early and minimise your costs. But again, you’ll need to check your lease for a sublet clause and you’ll need to remain involved with the property until your lease is up — which is something you might not want to do.
Negotiate with your landlord
If you need to leave and don’t want the responsibility of managing a sub-lease, you can always try and negotiate a surrender of the office lease with your landlord. A surrender of lease is when both you and the landlord agree to end the lease. Remember, your landlord is under no legal obligation to agree to the surrender and there may be costs involved, such as a surrender fee to the landlord to compensate for breaking the lease agreement.
Take over your neighbour’s space
Do you need to expand your operations? If so, you may need more space. Or maybe your team don’t want to work from home, so you need more space to keep everyone COVID-safe and physically distanced. Again, you don’t necessarily have to break your lease and move to a new location. One of our best tips is to speak to your neighbours and see if any of them have space you could take over. Your building manager can also be a good source of potential opportunities too.
Be prepared to make good
If you’re planning on relocating your business — whether your lease is coming to an end, or because you’re breaking your lease, you’ll need to “make good” before you hand the keys back to your landlord.
A “make good” clause is often standard in most commercial leases. It places an obligation on the tenant to return the premises to the state as leased or back to base building standard and is common where a business has leased a sell or made changes to the existing fit-out.
It’s worth checking this out with your solicitor because even if you can’t see a make good clause in your lease agreement, you might still be obligated to return the premises to it’s as leased state.
Vestra can help you with your changing office needs
If you’re currently needing to make changes to your office space — whether it’s expanding or downsizing, we can help. We’re a full-service office fit out company with expert planners, designers, project managers and builders with years of expertise designing high-end creative workspaces.