By Roger Allsup, Partner, Construction team at SAS Daniels
According to HMRC, the number of UK commercial property transactions has reached its highest level since the credit crunch, with 115,400 sales in the last year representing a 6% jump. While these figures remain lower than those of 2007/2008, it’s clear that confidence abounds in the commercial property market. With a growing number of investors snapping up properties, there has been a 10% rise in leasing activity over the past year, with a 10% fall in the availability of property. This has put upward pressure on prime office rents.
Despite this increase in rents, many companies find themselves faced with decisions about whether to make the move or not. Whether they feel that they’ve grown out of existing premises or simply that the space is no longer fit for purpose, it’s vital that business owners consider all of the costs before signing on that new lease. In the same way that moving house can be stressful, so can relocating your business. It can be time consuming and costly and people often make the mistake of only focusing on how much the rent is going to be; when the reality is getting a new lease is just the start of it. People often don’t even contemplate what the move means when you start the fit out.
When moving office most businesses don’t realise how daunting or how much it can cost to turn a shiny new office from a hollow shell to a space that is ready for business. It can easily cost £100 per square foot so if you have a 100,000 sq. foot of premises it could cost you up to £10 million. The rent isn’t looking so bad now is it?
Before you run up bills in this area, do your homework and plan. Engage with experts who have a real estate specialism to try and keep the refit and relocation costs down. At a minimum, businesses should consider the following when managing their relocation:
1. Plan effectively and consider your options – Businesses can easily be crippled by surplus real estate costs, so ask yourself do you need a ‘trophy building’? Do you need all you staff to be in the same place? Could possible secondary premises be considered? Be clear on what’s essential and what’s a nice to have.
2. Enter into a contract with your fit out contractor as soon as possible – Experienced contractors are in short supply meaning they’re constantly busy. So by delaying the settling of the contract by any amount of time could add to your final price.
3. Make fit out your professional advice priority - Getting up front specialist advice from an experienced construction lawyer can not only help you to save on your final price but can also help to reduce or hedge your risks.