You’re two years out from your lease expiration date. That means it’s time to start thinking about next steps. From your vantage point, this might sound like a silly thought: you still have almost forty percent of your lease obligation remaining. Why should you be planning this far ahead? The truth is, when you stop to analyze the various scenarios and the length of time each can take, it’s not too early, and today I’ll tell you why.
Let’s start with the facts.
Once your lease expires, you have five options:
1) Stay where you are
2) Move to the same size space in another building, either as an upgrade to your current situation or to reduce your rent
3) Take more space
4) Take less space
5) Close down the business
In accordance to commercial leasing laws, you can’t stay in the space after your lease expires. If you do, the landlord, by statute, can charge you two times your current monthly rent. I’m guessing that’s something you’d rather avoid.
Your most viable option: move to another space—a process that includes a number of components, which, taken together, can span the better part of two years.
Let’s explore each phase in detail.
Identifying the new space:
As you consider where you want to go next, you’ll need a month or so to identify your current and future needs. To do this, start by asking yourself the following questions:
- What works well in your current space?
- What would you like to change?
- Do you need more/fewer workstations and/or offices? If so, how many?
- Does the building suit your geographical needs? If so why? What about this geography works for you?
- Does your current space convey an image that supports your brand—one that you’re proud to present to customers?
- What are your cost needs and rental budget moving forward?
With a clearer picture of your needs, you’ll be ready to tour the market. Plan on another 30 days, at least, to find buildings that you like.
Next step: the LOI (letter of intent)—another 30 days. Typically, I like to give at least two, if not three, LOIs to the buildings of choice so we can identify where the best deal will be. No need to commit to one building at this time.
Finalizing the lease and planning the space
After you’ve identified a building and agreed on the terms, the landlord will prepare a lease. Typically, the larger the space, the longer the lease. This step can generally get accomplished in 30 days. But if it requires more time, you can generally grab some extra days from other stages in the process to make up days.
With the lease executed, your next step is to plan with the building architect. They will need at least two weeks to craft plans, then another two weeks to modify them. With your approval, they will then prepare construction drawings (also known as signed and sealed plans).
Here’s where the process slows down.
It can take six weeks for a town to approve your plans—and that’s assuming they make no changes. If they do request changes, plan on another 30 days for final approval. While this part of the process requires patience, you can use this time to start sending the unofficial plans out to contractors for bids.
Preparing your space and moving in
With plans approved and a contractor hired, the construction can begin. Depending on the complexity and scope of construction required, this can take 90 to 120 days to complete.
The space is now ready for you to move.
How much time has passed? Nine and half months have elapsed from the first thought of your lease expiring—if everything goes smoothly.
I ask you now: Is 24 months out too premature to be thinking about future space? Granted: two full two years may be on the early side, but by the time you’re 15 months out from your lease expiration, you should be well into the process.
Landlords don’t like empty space. This is the time that you can push for the best deal, since you’re not under any pressure. And what could be better than that?