Should we stay or should we go: How to decide whether to move offices

16 May 2019 In-depth

David Laws poses some questions to consider when your office lease is approaching expiry.

Your office is probably your second largest outgoing. It is for most organisations, yet choosing and moving offices is often assigned to a person without board-level influence and who has no specific skills for what can be an onerous and challenging task.

Why is this issue so critical to any organisation? Because the workplace is more than just a place to work. It is also a:

  • Powerful brand statement
  • Compelling catalyst to attract and retain talent
  • Hothouse to stimulate collaboration, and knowledge and idea sharing
  • Way to create a work community to encourage high performance and productive teams.

These are some of the reasons why Apple spent almost $6bn on its new, neo-futuristic HQ in California.

However, investment into inspiring workplaces and productive environments is no longer the preserve of the creative or media sectors and the likes of Google, Amazon or Yahoo. All sectors now recognise the importance of investing in their office environment, as much as in training, or management development.

Never before have offices and the workplace environment generated so much discussion and commentary from such a wide range of commentators. Workplaces and working practices are changing beyond recognition and it’s not unusual these days for employees, prospective employees and visitors to post selfies in funky offices on their social media accounts.

That is why selection of premises and workplace planning should be viewed as a strategic tool for organisational development and future-proofing, not just an amortised liability on the balance sheet.

Should we stay...

Every lease is a catalyst for decision-making, but that doesn’t always mean you have to move. Depending on the length of the lease, every five years or so, an organisation has a chance to think strategically about its workplace and to review its occupancy plan.

No longer are badly lit, ergonomically inefficient furniture and uninspiring work conditions acceptable for employees, nor for visiting beneficiaries, donors or partners who see the office as a reflection of an organisation’s soul.

Even if you stay put, the expectation is that some effort will be made to refresh the workplace and, from a management perspective, use the space more efficiently – while obviously negotiating better terms.

So what are your lease-end options? If your organisation is:

  • Expanding – a move is probably inevitable, or is it? Could a reconfiguration of the existing arrangement accommodate any forecast growth?
  • Contracting – the options are (a) move to smaller offices or (b) sublet part of the space, assuming the lease allows you to
  • Neither growing nor shrinking dramatically – stay put, but on better terms
  • Keen to be closer to beneficiaries or partners, for strategic reasons – in these situations, it’s still essential to consider the location and accessibility needs of employees as well
  • Looking to cut costs – think desk-sharing, energy-efficiency strategies, redeploying underused meeting rooms
  • Creating a more efficient, flexible, productive and employee-friendly working environment – reconfiguration should be the first port of call.

Irrespective of the scenario, you really should be thinking strategically about your potential workplace choices at least 12 to 18 months before a lease expires. This is particularly important if your existing agreement contains clauses demanding that the condition of the space is required to be in full repair prior to exit.

If you decide to stay put, the easiest but most expensive option would be to accept the landlord’s terms. However:

  • Would the landlord offer the incumbent the best terms, or keep those to lure new tenants?
  • What are the best terms? An internet search would give you an indication of rental values, but not the true deal value because all lease negotiations are, by their very nature, “off market” (the result of extensive market data and shrewd negotiation skills, rather than guesswork)
  • Do you have a legal right to stay? Or does the landlord have alternative plans for the property?
  • What would your optimum incentive package be should you stay?

While all organisations constantly seek to reduce their property costs, focusing solely on reducing the amount of space occupied is no longer the most viable solution. Optimising that space and accommodating future financial and organisational goals is now just as important as meeting employee demands for higher quality accommodation that is enjoyable to work in.

...or should we go?

Looking for a new workplace? How do you decide on the size you need?

There are many issues to consider:

  • The “space per employee” is now less than 100 sq ft in some organisations – remember 100 employees does not equal 100 desks
  • Desk ratios have become increasingly smaller, as organisations provide coffee lounges, break-out areas, quiet spaces and areas where people can collaborate
  • Mobile technology now enables people to work at any time and anywhere, and appeals to many employees. Therefore, the link between the act of work and the place of work has broken irrevocably. Mobile working also reduces overheads and the amount of space required. But is this working style compatible with your culture, or is the face-to-face exchange of information and knowledge, in a work hub environment, more representative of your organisation?
  • It can be a false economy for a business to offer mobile working as well as a dedicated desk for each employee. Fewer people in the office results in a reduction in workspace occupied and less furniture, as well as lower costs for heat, light and other consumables
  • Geography: consider employees’ potential commute (proximity to public transport hubs, railway stations and bus stations) and the viability of funding parking spaces.

Focus on hidden costs

In addition to expected costs (such as price per sq ft), there can also be several unknown costs associated with moving and occupation of new premises. Things to consider include:

  • When visiting a potential workplace, think beyond the cosmetics and consider what lies behind the veneer you see. A smart investment is a pre-acquisition survey, as it highlights both the true condition of the space as well as the performance and potential liabilities of “unseens”, such as mechanical and electrical systems
  • Ensure the contract is reviewed by someone whose day job it is to read leases and contracts and who understands potential elephant traps such as break clauses, rent reviews and dilapidation agreements. Miss these or ignore them and you will be playing financial Russian roulette
  • Business disruption aside, moving out of an office incurs more than moving costs. Tenants are also liable for end-of-lease costs such as dilapidations claims and reinstatement – the repair cost to ensure that the space is restored to the same condition as it was when you moved in.

Achilles’ heel

Because relocating offices is not a common occurrence for most charities, the process can seem daunting, disruptive and a huge burden on senior executives’ time, rather than an opportunity. We know that the process is often rushed, which leads to poor choices being made, unnecessary costs incurred and/or expenditure spiralling out of control. When time is limited, leverage to command your preferences can be equally diminished.

However, when planned and executed properly, an office move can prove highly beneficial. Think what the space you occupy could mean to your brand and how it could enhance your operational efficiency.

Dovetailing the brand and workplace can make a profound statement when recruiting staff, volunteers and donors ... as well as retaining them.

Of course a move can be disruptive – according to E.ON, companies lose on average 7.5 working days as a result of moving. So smart planning and deep knowledge of the process is critical.

A final thought

Although moving can be a major and quite daunting task, it is also a wonderful opportunity to create a workplace which mirrors your charity’s personality and ambitions, improves workplace efficiency and ultimately becomes an amortised cost, where costs can be appropriately realigned to future budgets.

David Laws is national business space expert at Matthews & Goodman

Top tips

  1. Consider how much space you really need – instead of what you think you need
  2. Remember that part-time staff, job-sharers and remote workers should share desks
  3. In a paperless office, you do not need acres of storage
  4. Are laptops a better option than desktop computers?
  5. Are multiple meeting rooms necessary, or would break-out spaces be more efficient?
This article forms part of our Charity Property hub. Booking is now open for Civil Society Media's Charity Property Conference view the full programme event details here - early bird prices end 17 May 2019. 

 

 

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