TMX Transform Associate Director Property Amanda Falahey gives MHD the lowdown on whether businesses should stay at the industrial site they are occupying or renting, or whether they should relocate.
Deciding to maintain your commercial property or pursue a relocation strategy requires crucial evaluation to determine the most cost-effective option.
A Stay vs Go analysis will help you do this, allowing you to evaluate your lease terms, market conditions, business growth, staff turnover, and relocation costs.
Minimising costs isn’t just about saving money – it’s about safeguarding your resources and ensuring a seamless transition for continued success.
When undergoing a Stay vs Go, consider three factors:
- Liability mitigation
What is your current lease situation? Review your lease term, lease tail, contractual obligations, and market rent clauses. Consider how these liabilities can be reduced, including, renegotiating make good clauses, annual rent reviews, and removing bank guarantees. Amending these items as part of a renewal may reduce overall lease costs and provide a more attractive option to stay.
- Expected growth
Across Asia Pacific, 69 per cent of logistics occupiers intend to expand their warehouse portfolios in the next three-years1, with the average lease length in Australia being approximately 29.5 months2.
Consider the comparison between the current and future state of your business. Companies experiencing rapid growth need to account for this expansion in their lease agreements, ensuring their facilities can accommodate future development. Alternatively, a decline in production may mean that the existing premises is too large, and downsizing may decrease overheads.
- Cost of relocating
The cost of relocating, including moving equipment and the potential loss of staff, must be considered when evaluating the financial impact of relocation. Moving during peak business periods or holidays can result in significant downtime and lost revenue. It is important to choose a time that minimises these risks.
However, there is no one size fits all strategy, and it is important to consult experts that can assist in assessing your data, market conditions, property considerations, and more.
When it comes to your business’s future, expertise isn’t a luxury; it’s a necessity. TMX can evaluate the elements required for you to navigate every decision, so you can focus on what you do best.
1 CBRE (2023). 2023 Asia Pacific Real Estate Market Outlook Mid-Year Review 2023 Asia Pacific Real Estate Market Outlook Mid-Year Review | CBRE
2 Re-Leased (2023). A Close Look at the Changing Landscape of Office Lease Lengths A Close Look at the Changing Landscape of Office Lease Lengths (re-leased.com)
Amanda Falahey, TMX Transform Associate Director, Property