Headquarter moves are not necessarily a headache
04 August 2022
The change in the way that office space is used has been gathering significant momentum since the pandemic hit.
Businesses have been forced to re-assess their strategies and working models to adapt to challenges posed by the shift in working practices and the needs of employees. Some are embracing the greater flexibility and looking to reduce their existing office footprint to bring down operating costs, allowing for investment in other areas of the business (such as IT). Others are looking for new office space which helps create an environment that inspires creative and collaborative work, which has a modern design and an appealing location in an effort to entice employees back to the office.
Many businesses have therefore been assessing whether they still want, or even need, the same kind of space that they’ve occupied in the past. For those that make the decision to move, the task will seem daunting, however, moving offices can have a transformative effect on a business and can reinvigorate the work force at a time when they need it most.
So, the decision has been made to move. What are the keys things that a corporate occupier should, and needs, to do to help ensure the process runs as smoothly as possible? Here are some of our tips:
- Plan early and be clear about what you want to achieve (both in the short and long term) – as with any big project the earlier you plan the better. You should be clear as to your reasons for wanting to move. Is it to downsize to cater for a more flexible working practice? Are you taking a bigger footprint to allow for growth or to create a safe working environment with more communal areas? Maybe your existing space is just tired and dated and you want a more modern and fun environment to work.
What is the long term plan for the business and how long do you want commit to the space for? What flexibility may be needed should that plan change? If the plan is to grow, how do you ensure that you can compete with other business when trying to recruit and retain the best of the talent? What can your office space offer them? The answer to these questions will differ from business to business and from sector to sector. However, it is important to identify and analyse these early (probably between 9-12 months in advance if possible) as they will have an impact on a number of other considerations.
- Establish how you can exit your existing space – is your existing lease term due to expire or is there a break option which you can exercise? If so, how much notice to do you need to give your landlord? You may find that you need to approach your landlord to try and negotiate an early surrender of your lease. Or you may need to market the premises for sale/letting and an application for landlord’s consent to assign/underlet is likely to be required if a buyer/undertenant is found. Such an application would need to be submitted to the landlord in accordance with the terms of the lease. Whichever option is applicable, they will all have an impact on timing. You should really start thinking about any planned relocation at least 2 years in advance where that is possible.
- Getting ready for disposal – if disposing of your existing premises, whether it be by way of surrender, assignment or underletting, get your paperwork in order. You will need an EPC, your Health and Safety file, copies of service charge accounts for the last 3 years, a Fire Risk Assessment, Asbestos Management Report, copy of the Landlord’s building insurance policy, the Landlord’s VAT election (and yours if you have elected), any relevant rating correspondence, copies of any contracts that you want to transfer to the new tenant, copies of any air-conditioning inspection reports and/or any warranties and guarantees relating to the premises.
- What are the key dates – when are you required to exit your existing space, when do you need access to the new space to start any fitout works and how long will the works take? What impact will this all have on your day to day business? It would be advisable to build in some time for potential delays (for example, delays in supply chains for materials or equipment). All key dates should be clearly communicated to your professional advisors and the advisors acting for any landlord.
One approach would be to decide upon your target date for actual occupation by employees and then work back calculating the build time for your fit out, a lead in time for appointing the contractors, allow 4-5 weeks for getting any landlord’s consent to the works and then build in your slippage for delays.
- Work out your budget – what condition is your existing space in and what are your potential dilapidation costs under your existing lease? Are you entitled to the return of a rent deposit from your existing landlord? You will need to factor in relocation costs, costs to fitout the new space and upgrade or install any IT equipment, costs payable to advisors, the rent and other payments due under the new lease, business rates, any stamp duty land tax (England) or land transaction tax (Wales) and any rent deposit required by your new landlord. A project like this can quite easily put pressure on any budget so it is sensible to allow for potential overspend.
- Location, location, location – where is your current office located and are you looking to remain in the area or move to a different location? Are you looking to move in or out of the city? Where do your employees live and what impact will the location have on them in terms of commuting (taking into account some may be less comfortable on crowded public transport). Are you looking to split your operations between several locations? What are the transport links like?
- Type of premises – what type of building do you require and what facilities does that building need to offer you? Do you need to carry out any surveys of the premises? What are the local amenities and social facilities like? Are there restaurants, bars, cafes, fitness facilities, retail shops nearby (or even within the building itself)? Such amenities have become increasingly important to help entice the employees back to the office. They can also help stimulate the culture of the business, provide an environment for connecting with other professional people and help foster collaboration and fun. The goal should be to make the office a destination with a purpose.
- Appoint advisors – these could include:
- a dilapidations surveyor to advise on your dilapidations liabilities under the existing lease;
- a property agent to help find the right office space and to advise on, and to negotiate the best, office lease terms. The market, supply and demand and the type and location of the building will have a bearing on what incentives a landlord may be willing to offer. Whether it be rent free periods, financial contributions to fitout costs or flexible terms, a landlord will be expecting to give something. So having an experienced agent to negotiate on your behalf can help secure the best terms possible;
- a legal advisor to review the terms of your existing lease and assist you with your exit. This could include advice on dilapidations, reviewing any requirements and conditions to any break option and ensuring that any break option is validly exercised. Failure to serve a valid break notice or to strictly comply with break conditions could invalidate the break, thereby potentially de-railing any plans to move. They will also be able to negotiate your new lease (and ancillary documents) with the landlord’s solicitor and carry out the usual due diligence on the premises;
- office interior specialists to help design and manage the fitout you require. This would include things such as floor plan layout, office furniture, equipment, signage and other office facilities.
- IT – assess whether your existing IT offering is still fit for purpose, work out the logistics of moving any IT equipment to the new office and liaise with any existing network providers. You will also need to make enquires with the new landlord about the telecommunications set up in the building. If there is a need to install new telecommunications equipment at the building, there may be a need for a wayleave agreement to be entered into with a service provider. The position should be established as early as possible as wayleave agreements can take time (allow 60 days minimum) to put in place. A supplier is also unlikely to start dealing with you until you have a contractual commitment to take the new space. The end goal is to ensure that, from an IT perspective, your workforce can function from day one.
- Deal with utilities – close down your accounts at your previous office and establish, via the new landlord’s building manager or solicitor, what connections are available at the new premises and who the current suppliers are. Set up new accounts with the suppliers or arrange for accounts to be opened with any other chosen provider if permitted.
- Risk assess – undertake a fire risk assessment, health and safety assessment, asbestos survey and any other appropriate assessments prior to or immediately following occupation of the new office space.
- Removal Company – obtain quotes from a variety of companies or use a trusted company you have used in the past or who has been recommended to you. Meet with them to talk through your requirements.
- Inventory – make an inventory of all the office furniture and equipment that is to be moved, identify what needs to be replaced and what can be disposed of. The type of office space chosen and the terms that are agreed with the landlord will have an impact on what is needed.
- Announce the move – your employees are most likely to be excited about the move so decide when, and how, you are going to share the news (probably best to wait until contracts are exchanged to avoid any disappointment!). Also, consider how you are going to publicise the move and inform your business associates, clients, suppliers and professional advisors of your new office. Consider whether that is best done via the press, email or via social media channels (or all three).
- Update details – update your registered office address at Companies House (if needed) and update your website, marketing materials, stationery and anything else which is needed.
- Party! – have a moving in party although keep it low key as the last thing you want to do is upset your new neighbours or your new landlord. Maybe invite your professional advisors.
There is clearly a lot to think about. Being organised, focused and communicating effectively with all parties involved is therefore key. It is clear that the way we work is rapidly evolving, as are the expectation and needs of employees. Therefore, a new office environment which aims to cater for such expectation and needs will only help improve staff wellbeing and productivity levels.
For more information on any of the topics raised in this article, please contact Rachel Francis-Lang.