Insights

It is a quandary. Should a business wait until growth to increase their office space? Or should they take the leap and lease more space to accommodate future growth? Basically, when is the best time to start looking for a new office space?

There’s no one-size-fits-all formula for finding the right office space, but there are elements to consider when you do, including the timing.

When your business is on the cusp of outgrowing its location or space requirement, it’s time to start looking for a new office lease. Having the right-sized office space will provide the business with greater capacity, or the option to consolidate its operations and reduce overhead costs. Settling on the wrong location, or not planning for growth could result in moving again sooner than you wanted to, which will inevitably be a strain on both your budget and productivity.

Here are some factors to contemplate when considering the best time to start looking for office space.

Consider your medium and long-term leasing plans

Long-term planning for the business is important. If the business is expanding at a rapid rate, you need to start your search early. Don’t forget that finding the right space, finalising the lease, and commissioning a new office fit out will take time, not to mention the time involved in the physical move itself.

If the business is already in a leased premises, you will need to provide written notice to the property owner. If this means a break lease, this is likely to have financial and administrative implications, potentially even legal consequences. This should be a significant consideration when it comes to the decision to move or not. Alternatively, speak to your agent about restructuring your incentive to cover some of your outstanding financial obligations of that lease.

Further, when considering the timing of a move, think about how many staff will be working on the property at peak and usual times. The National Construction Code sets a general guide of about 10 sqm per person as an office space requirement. Will staff numbers exceed this?

It is also prudent to factor in the time for a new fitout in a new office, or make good at the existing premises. Whether it's structural modifications, design aesthetics, or tech integration, allowing for a longer lead time ensures that the space is tailored to your exact requirements. This prevents any last-minute rushes or compromises on essential features.

Market trends and cycles impacting commercial leases

Real estate market trends and cycles can influence the availability and pricing of office space. Since the peak of the pandemic, Brisbane office vacancies have declined significantly, and the city centre now ranks among the nation’s tightest markets. A global property consultancy found Brisbane outperformed national rental growth of 2% to record an effective year-on-year increase of 6.5%. The research said Brisbane had less exposure to the major corporates, who were consolidating their property footprints.

While there is leasing growth in the central business district, there are always opportunities on the city fringe or inner-city for high-quality office spaces.

Market conditions will have a significant impact on the lease terms available for tenants. In a high- supply market, for example, tenants may be able to negotiate more favourable terms on a fit out, duration, inclusions and price. Conversely, property owners may be able to set their own conditions if there are fewer available office spaces for lease.

Seasonal considerations for property leases

Property markets tend to follow a predictable cycle throughout the Australian year. From late December through to January - sometimes even early February - many professionals in the commercial property industry may be on holidays for periods or working reduced hours. With lawyers, leasing agents, and owners away, it can be challenging to identify, negotiate and confirm a new tenancy at this time.

That’s why it’s best to begin your search for new office space sooner rather than later. Leaving it too late in the year can impact availability & any potential leverage during lease negotiation. In February, however, the market is generally ready and raring to go, with more tenancies available, builders ready for commercial fit outs, and agents keen to get their year started on a good note.

Lease renewals and negotiations

While you’re embarking on an exciting search for your new office space, don’t forget to consult your existing lease agreement. What are the terms? When does it expire? Breaking the lease at your current space early could involve some financial penalties, so it’s best to have an open and honest dialogue with your landlord and/or agent.

You will also need to provide written notice of your move – how far in advance will depend on the details of your current lease. Consider engaging a property lawyer or commercial lease expert (like us) to go over the terms of the lease agreement, and the overall impact of a move. They may be able to assist in negotiating a break lease arrangement or structuring a new lease agreement to cover any outstanding rental obligations of your current lease.

It may be a good idea to have a backup option or even an alternative office space in the pipeline, just in case your negotiations don’t go as planned.

Responding to the business environment

Business adaptability and continuity are key. When considering a change in office space, external factors such as the business environment, pricing, and availability, will all impact the need for more or less space.

What would require a change in office? Business growth or downsizing is usually the primary factor. Location change is also important if it is better suited for staff and clients to access the company in a different location. The pandemic experience has shifted many offices to the suburbs and inner city.

And if the business requires complex technological inputs, there may be restrictions on the options available.

When it comes to finding new office space, timing is everything. When you begin your search, it will be entirely unique to your business.

Aegis Property Group can help you make an informed decision that will contribute to the growth and efficiency of your business, and we can help you read the market, and find that perfect office space for you.