5 Tips to make your rental commitments more flexible

Do you know how much square footage you will need to support your growth in 3 years, 6 years or 9 years?

As your business evolves, so will your needs. Flexibility in your lease commitments is essential to avoid them becoming restrictive over time.

Here are 5 tips to help you add flexibility to your leases.

Rent too big and sublet your surplus while you grow

To make your rental commitments more flexible, we recommend over-leasing and subleasing. Some companies choose to take on more space than they need from the start and sublet the excess. There are several reasons for this:

  • While subletting can represent a financial risk, it remains limited in areas with a low vacancy rate (Paris Centre, Paris CBD, etc.).
  • This option allows you to absorb your growth over time by limiting the rental charge to the space you need.
  • In popular and competitive rental sectors, taking on large surfaces can help your application and avoid the owner having to divide his building.
  • If you opt for an entire building, which you will dispose of independently, you will gain in ease of management. You will also be able to create synergies that will boost your internal innovation by hosting companies that share your vision in your premises, following the example of corpoworking.
The right solution for every context
We recently assisted one of our clients, a major player in the tech industry, in the lease of a 7,000 sq.m. building in the CBD. Their initial requirement was for 5,500 m2, so in order to position themselves in the face of strong competition for the premises that best met their needs, we negotiated a clause allowing them to sublet up to 40% to third-party companies without prior approval from the lessor, which allowed them to adjust their surface requirements. Our client chose to take the risk of subletting, a risk that paid off.

Add an additional exit option to the usual 3/6/9 deadlines

Lease deadlines are not always adapted to the strategic stages of your business. To limit the constraints and to be able to move without waiting, it is possible to negotiate one or more exit possibilities in your lease, in addition to the usual deadlines (3, 6 and 9 years).

Depending on the geographical sector and the balance of power between lessors and lessees, a severance payment is usually requested. It is generally calculated in proportion to the support measures obtained at the beginning of the lease. Negotiating them well is therefore essential.

You can also think about flex ready, i.e. from the beginning of your construction phase, you can design layouts that facilitate the implementation of a flex office organization, which can be deployed during the life of the lease without carrying out additional work. In the current context, this support is increasingly requested by our clients.

Negotiate the possibility of returning or taking additional m² during the lease

During the course of a lease, it is interesting to be able to increase or restore surfaces in case of strong variation of your staff and your needs.

Integrating the possibility of reducing your m² between two deadlines can bring you real flexibility.

In case of unexpected growth, we advise you to foresee a right of preference on the surfaces coming to be released in the building. This will allow you to have priority over an application from outside the building.

An adapted solution for each context
To assist several of our clients (industry and investment funds) with medium-term external growth issues, we included a preferential right in the negotiations. This allowed us to offer them the possibility, during the course of the lease, to take over additional surface areas within their real estate complex, in the event of a third party vacating it.

For a shorter commitment, opt for derogatory leases or subleases

If the minimum firm term of a classic lease (3 years) seems too long, you should know that other solutions allow a shorter commitment.

Overriding leases or subleases are sometimes offered for 1 or 2 years. We recommend that you study these options.

But be careful, to arrange the premises to be able to work in good conditions à cost and this cost must be taken into account in relation to the short duration of the commitment.

The right solution for every context
We recently assisted one of our clients in the consulting sector in the context of a session of one of the activities of their group. In order to allow the entity concerned to take the time to build its new business strategy and to anticipate its longer term growth needs, the option of a 2 year sublease was preferred in plug and play premises after comparing the different possibilities.

To make your rental commitments even more flexible, opt for coworking

If our previous tips don't give you enough flexibility, coworking is an option to consider. By freeing yourself from the design and construction periods, you can accelerate your move.

Once in the premises, flexibility is available to you in both directions:

  • If your needs are reduced, it is possible to release them with short notice (usually 1 month).
  • If you are growing, it is easy to take more workstations or space in the site.

This flexibility has of course a cost, coworking spaces being, in the long run, more expensive than offices in traditional lease.

The right solution for every context
In case of tight timing, this option can have a real advantage. This was the case for one of our clients whose headquarters were spread over two buildings. Having to be evicted from one of the sites by its owner, it had become urgent to move the teams quickly. As one of the sites had been evicted by the owner, a deadline issue required a quick repositioning. We advised our client on an adapted co-working offer, the time to accompany the group on the definition and the implementation of its new project of reunified headquarters.

In the first quarter of 2022, coworking operators regained their driving role, representing 10% of all space placed in the capital and even 14% in the Paris Central Business District (CBD), i.e. 4% of the space rented in this sector.

Flexibility is a growing need for companies, in a changing economic and societal context.
It is necessary to take this into account from the very beginning of your project. The commercial real estate market is constantly evolving and the balance of power between lessors and tenants is not the same everywhere. To be advised and accompanied by experts in the market, workspaces and lease negotiations allows you to carry out your project more efficiently and serenely.
Our Real Estate Services team is at your disposal to analyze your situation, your specific needs and answer your questions.

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