What are occupiers thinking? and What is driving their property decisions? These are two questions, the answers to which, many landlords, developers, and especially agents would like to know.
Whatever the business situation, the imperative for efficiency, financial or otherwise, has never been greater. The Board room focus inevitably lands on property costs sooner, rather than later.
So, what are the options to consider? The appearance of a lease end event often creates both opportunities and threats, whilst the economic situation will be the deciding factor between growth or retrenchment.
These events aside, the perception of ‘Cheap property’ and ‘astounding deals’ can often lure occupiers into a business changing situation. Properly planned, a well thought out strategy to move to better quality accommodation,and to facilitate improved working practices can transform the fortunes, and morale of a business.
A factor against taking advantage of the current market, is the availability of finance, and the reluctance of lenders. Even if cash can be found, it may be that investment in the business itself, rather than premises , represents the best option.
As ever, bargains are bargains for a reason. A much reduced property, although a relative bargain now, is unlikely to see much growth in value in the future, for the same reasons that it is much reduced now.
Relocation costs aside, ‘caveat emptor’ should remain the watch word of the wary.
Of course, the easiest decision for any business, and the most frustrating for agents at least, is to stay put. Given the economic environment, a choice to not spend money, and move a tricky decision into the future, seems appealing.
In fact, staying put, and renegotiating with your newly keen Landlord can result in additional incentives, and a beneficial renegotiation of terms. Many occupiers have been seeking flexibility in property leases, and now is the time to negotiate them. It is a different matter, and one of some skill, to decide how best to use that flexibility when the time comes.
The stay put option can however, have a negative effect , in that staff may be demoralised by the lack of business dynamism in making a bold move. Indeed, by passing up an opportunity to revitalise the business, competitors may well move ahead.
The real skill for any property professional in this market is to understand the whole range of issues, not only from the property viewpoint, but especially the occupiers business imperatives.
Article written by Andrew Gardiner for Commercial Property News