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In the ITRA Global Facility Acquisition Mistakes Survey, taken among its members, NEGLECTING LONG-TERM PRIORITIES ranked second, after Not Allowing Enough Time.
Business owners who think only about solving immediate needs can face expansion problems again very soon. In addition to evaluating short term needs relative to square footage requirements (total size and dimensions of demised rooms), type of floor plan (open, private/office-intensive, or a balanced combination), communications needs, parking needs, access and security needs, etc., business owners should also consider long term needs. By obtaining facilities and lease terms that will enable the company to expand, contract or relocate as necessary, business owners can avoid unnecessary aggravation, loss of business and costs associated with relocation. Examples of such important lease clauses are as follows:
- Expansion rights that obligate landlord to provide tenant with additional space;
- Cancellation rights (commonly referred to as a “kick-out” clauses) that allow tenant to break the lease under certain conditions, such as when tenant needs to expand and landlord cannot provide additional space on site;
- Extension rights are essentially renewal options that allow a tenant to remain in premises beyond the expiration of the initial lease term; and Sublet rights that provide tenant with a solution whereby a substitute tenant may occupy premises and mitigate tenant’s economic pressure.
Suggestion: After discussing the company’s immediate needs and long terms goals with senior management in all departments, meet with leasing experts and space planners or architects to determine:
- The most optimal combination of office size and layouts (modular furniture, hoteling, size, amenity requirements, etc.);
- Facilities that are flexible enough to service future needs;
- Lease clauses permitting tenant’s flexibility in the lease document.
ABOUT ITRA GLOBAL
Collectively, ITRA Global members have an average of 20+ years of tenant representation experience - advising international, national and local commercial tenants in thousands of leases totaling millions of square feet.
