News & Research Archive

New Office Space Not Ready Yet?

Jul 09, 2007

 

You are scheduled to move into your new office space on August 1st and you just found out that the existing tenant would not be ready to move out in time; or, because of permit issues your tenant improvements will not be completed. What do you do now?

 

Today, tenants are fast-tracking their moves at a much faster pace then ever before. Five years ago it was typical to move into a space four to six months after tenants originally signed a lease. Today, the move could be within 45-60 days. There are a number of factors as to why tenants are choosing to move in so soon after a lease signing. First, in a tight office market, landlords give the tenant no choice. Second, offices today are more about computers than furniture and easier to move then former offices with lots of files and research materials that can now be found online. Third, businesses often times to accommodate growth simply need their space faster.

 

However, building permits; lack of construction workers; furniture dealers that no longer keep inventory available in warehouses; and other services that have to be scheduled can all delay a move.

 

If you find yourself looking at a delayed move date here are some options that you can consider.

 

1)      If you have existing space you can notify your landlord that you will need to holdover. Holdover will cost you somewhere between 150-200% of your existing rent. This may not be an option in all cases depending on whether or not the landlord has already released your former space. Staying beyond your lease term could create a major liability problem for you if your landlord does not consent to the holdover.

 

2)      You can telecommute. You could have your employees work from home. This could be accomplished if you check with your landlord and see if they would allow you to leave your server in place until your new space is completed.

 

3)      You can rent space at an executive suite. Most people think of executive suites as a one room option but today executive suites can offer spaces to accommodate up to7, 000 square foot users. Although this would appear as an expensive option, this actually could be the best and simplest solution. Executive suites offer you a complete solution including phones, furniture conference rooms, and etc. It would also allow your existing furniture to remain with your moving company and avoid a second move, which can be costly.

 

4) You could find out if you could move into part of your space while the remaining space is built-out.

Although this seems like a potentially good option this could be a bad idea in terms of work environment for your employees. Construction noise, dust, and security are all concerns if you decide to take this option.

 

The first thing to do if you find out that your space is not ready is to check out your existing lease specifically looking at your holdover provisions. Make sure you know your rights before you call your existing landlord with the news. Also check your new lease and see what your rights are there. How much time does your new landlord have to complete your necessary improvements before they have liability.

 

One way to avoid this problem is also to plan certain parts of your move sooner then later, furniture vendors; moving companies; and, telecommunication firms can all be secured well before your lease is signed. It could make a major difference in preventing a delay for the move in the future.

 

 

 

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Written by: Hans Hansson

E-mail: hans@starboardnet.com


Hans Hansson is President of Starboard TCN Worldwide Real Estate Services as well as a member of the Board of Directors for TCN Worldwide Real Estate. Hans has been an active broker for over 22 years in the San Francisco Bay Area and specializes in office leasing and investments. If you have any questions or comments please email hans@starboardnet.com or call him at (415) 765-6897. You may also check out his website, http://www.commercialspacefinder.com/.

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