When your company's needs change vis-a-vis its office space, you have a basic choice to make: renovate your existing space or find a new one. While renovation might seem to be the cheaper answer while relocation is the most complicated one, your situation might be different.
When Office Relocation Is Best
There is one simple reason that office relocation might be the best choice: if your current location just doesn't work. Whether your current space is poorly located, too expensive or no longer available, sometimes relocation is your only option.
Even if your space works well for your company, office relocation might still be a better choice. Among other things, you can end up with no down time. When you relocate, you can time your build out so that you can work in your existing space until the new space is ready. Doing this also keeps your work space away from the construction zone, minimizing noise, interruptions and the risk of your company being perceived as being chaotic or unattractive.
Choosing to move to a new space may also give you access to more tenant improvement dollars to reduce the cost of your build out. Many landlords are more generous with new tenants than they might be with renewing tenants -- even if doing this doesn't make sense for them. At the same time, if you need to do an extensive remodel, it might be less expensive to start from a new, bare, space than to demolish an existing space. This also helps your TI dollars go farther.
Reasons to Choose Office Renovation
While office relocation might be tempting, renovating your existing space can be the best choice in three different situations. Minor projects, irreplaceable spaces and irreplaceable leases are all very good reasons to stay in your current location.
Renovating your office can be inconvenient, expensive and disruptive to your operations. Then again, relocating can pose all of the same challenges. If all that you need is to do a few nips and tucks, or if you can contain your renovation work to unused areas of the office as you gradually move from your old space to your newly designed space, staying in place might be the best option.
When a site is a perfect match for your needs or when you have a great deal of good will tied to it, renovation might also be your only option. This is especially true in supply constrained markets like the central business districts of many major markets.
Finally, while some landlords are willing to pick up tenants looking to do an office relocation by offering very attractive rents, your lease might be a better deal. For instance, if you signed your lease during a trough in the market (such as 2009 or 2010) and locked in a long term lease with set-price renewal options, that price could be significantly better than what you could get on the market.
Ultimately, there is no right answer as to whether you should plan on an office relocation or a renovation. The right choice is the one that works best for you in any given situation. If you need help figuring out which one applies to you, talk to a commercial real estate broker that specializes in representing tenants and that can help you weigh your options.
Other great Commercial Real Estate articles: