Renewing Office Space: Consider These First

Empty office space

Renewing office space is no small matter. Traditionally, leases will lock you into a space for five to 10 years, with a significant amount of money on the line. As your current lease draws begins to draw near a close, you gain a unique opportunity to best meet the evolving needs of your business and are presented with answering a unique question, “should you stay, or should you go from your existing office space?”

Looking at the trends in the workplace and using data to evaluate your business are two important ways you can make good decisions. If you're facing a lease renewal in the next two years, consider these four key factors to secure a good deal and settle into a space that meets your business needs.

Be an Early Bird, Give Yourself Ample Time for the Search

Whether you renew an existing lease or sign on the dotted line for new space, the more time you have on your side, the better. You wouldn't invest in anything without doing your due diligence and making sure you're getting the best deal. Your office space deserves the same time and attention, particularly considering the savings potential you could lose if you start too late. To negotiate the best terms, you want to come from a position of being proactive, not reactive.

The standard time frame to work within depends on the size of the space you need, as noted by Aquila, one of the premier commercial real estate firms in Austin, Texas. If you're looking for something that's larger than 25,000 square feet, you need anywhere from 18 to 24 months because limited inventory is typically available. For spaces between 10,000 and 25,000 square feet, it's standard to renew within a year of lease expiration. Businesses in need of smaller spaces typically get started anywhere from six to 12 months before lease expiration.

Understand How Your Space is Being Utilized

We're living in uncertain times that require a new way of looking at your commercial real estate portfolio. It's arguably more important than ever before to have a deep understanding of what your business needs to operate efficiently and with flexibility. In the post-pandemic world, most businesses are moving away from dense, open layouts to create additional private spaces or collaborative areas that flex with changing needs.

To gain the knowledge necessary for making the best decisions for your office space, you need the right tools like space utilization sensors that can provide actionable data insights that tell you how your space is being used and where it will be best to optimize.

For example, the sensor technology that 4SITE offers delivers data on points like:

  • What percentage of your workforce is in-office at any given time?
  • What space is being utilized most often?
  • What kind of layout works best? Do your employees prefer large, open spaces or something more traditional with private offices?
  • How frequently (if at all) are conference rooms used?

Work From Home vs. Onsite Employees

During the age of COVID-19, the majority of businesses are working remotely. Some businesses plan to stay that way. PwC's June survey of 330 leaders in the finance industry revealed that 54% of CFOs plan to continue giving their employees the option to work remotely on a permanent basis.

Even before the pandemic, remote work was catching on more and more. More than 40% of United States workers worked remotely at least occasionally according to Business 2 Community. PwC's research shows that after COVID, most employees would still like to have the option of working from home. More to the point, three out 10 executives are already considering scaling their space down because of the number of employees likely to work from home.

That makes sense. Fewer employees in the office day-to-day means less square footage needed. While you're evaluating your office space requirements, consider how many employees will return to onsite work full time and how many will work remotely one or more days per week.

Experts recommend allocating roughly 120 to 500 square feet of space for each onsite worker, depending on the type of floor plan you're working with. In the modern, post-COVID workplace, you'll need to consider spacing between desks and ample room in conference rooms and shared spaces to allow for physical distancing as recommended by local and federal guidelines.

Current and Future Employment

Renewing office space is a bit like trying to see into a crystal ball and predict where you see your business in the next five to 10 years or so when you don't rely on accurate data. Do you anticipate adding more staff? If so, when do you plan to hire them and what type of staff will they be — administrative, sales or executives? Will they be working remotely, fully in-person, or on a hybrid basis? Depending on the answers, you might need to add 10% to 20% to your square footage estimates to accommodate your growing business.

There are a lot of unknowns in the mix for the workplace, but it's crucial to understand the amount of space you really need. Which underlines the importance of having the right set of tools and data on your side.

With 4SITE's proprietary technology you can find patterns and predict potential occupancy trends in the workplace. These trends will allow you to make informed decisions on whether you should expand, relocate, or sublease your space, but they also allow you to:

  • Create an optimal environment for your employees
  • Limit your exposure to unproductive real estate
  • Increase workplace productivity
  • Make data-driven decisions
  • Create support for your teams
  • Provide visual reporting to keep your business leaders clearly aligned with what's happening in the workplace
  • Attract and retain talent by creating a welcoming company culture
  • Reduce CAPEX and OPEX

Actionable data is the key to making sound decisions that could very well save a substantial sum while helping you choose office space that best suits your business needs.