If you're nearing the end of your commercial lease, it's time to decide whether to stay where you are or search for someplace new. There are upsides and downsides to both scenarios. Read on to explore the pros and cons of each.
To Renew...
Renewing your commercial lease has some potential benefits for your company, including:
- Less Interruption to Your Business.
If you remain where you are, you won't have to invest time in searching out a new space. Plus, you can avoid the downtime that comes with having to move your entire office and your team to a new location
- Cost Effectiveness.
Staying in the same commercial office space typically means not having to pay out of pocket for build-outs and tenant improvements. You'll also spare yourself the costs related to researching properties and paying for the services of lawyers and accountants that are required to ensure a smooth lease negotiation.
For all of the benefits of renewal, there are some drawbacks, too, such as:
- Aging Building.
At the very least, your building is as old as your lease, and in many cases, is much older. Staying in the same place can mean missing out on more modern amenities and green technologies found in newer properties.
- Less-Than-Ideal Accommodations.
Your business needs may have changed since you initially assigned the lease. If you simply remain in your unit, you may end up paying for unused square footage or have to make do with cramped conditions.
- The Potential to Overpay.
If the real estate market has taken a downward turn since you signed your lease or demand for space has declined, staying in one place could mean paying a higher rental rate than the average cost elsewhere.
…or Not to Renew
Choosing to look for new commercial office space can be advantageous due to:
- Modern Amenities and Green Upgrades.
Relocating to a newer office building can mean reaping the benefits of more modern facilities and amenities that your current space can't provide. You can also consider moving to an LEED-certified building, which can lower the cost of your utilities and has been shown to improve employee efficiency and job satisfaction.
- A Space That Matches Your Business Needs.
Your company has likely changed since you initially signed your lease. Relocating can give you the chance to find a space that is uniquely suited to your current business needs and better able to meet your anticipated needs going forward.
- A Chance to Take Advantage of the Market.
If you relocate, you can do research to determine what the current average rental rates are and ensure that you're getting a fair deal.
Downsides to not renewing your lease include:
- Lost Work Time.
Moving causes a major disruption to businesses. In addition to having to close the office to relocate, it will take time for your team to get acclimated to their new surroundings, resulting in reduced efficiency.
- Cost Concerns.
Relocating can be expensive for companies. Not only will there be moving expenses, but you'll likely have some expense toward making a new location the right fit for your needs, even with an tenant improvement allowance.
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