Colliers' Global Occupier Outlook 2023 report revealed that employees want the best of both worlds, with 70% of workers wanting flexible work options and 65% of them craving more in-person time with their teams. It also demonstrates that well over half of firms anticipate at least a slight increase in their usage of flex or co-working solutions.
Unsurprisingly, occupiers are now faced with a conundrum as they establish how to best provide employees with the flexibility they seek (or demand), keep the business' culture intact and provide their employees with the right space in the right location.
Ultimately, in order to attract and retain talent whilst maintaining a collaborative corporate culture, businesses will have to find solutions to make their people want to attend the office. This will not be feasible without providing a comfortable and convenient quality location with essentials such as available desks and meeting rooms, but also additional amenities aiming to increase the overall office experience.
To this end, property portfolios must evolve and be consolidated; with a focus on quality over quantity. We run through below some options for reducing space and consolidating estates to meet those needs.
If your current lease is due to expire shortly
Short term leasing
Negotiating a short term lease or lease with a suitable break option could offer you the flexibility you currently seek, as it will allow you to move out quickly as and when you are required to continue to adapt to changing needs.
Whilst this is not a new trend, it may sound daunting for many occupiers not to occupy their own private space. However, flexible space agreements provide a wide range of advantages, which cannot be disregarded and could improve an occupier's journey to strike the right balance. Indeed, sharing a cafeteria, gym, childcare facilities or even printing services could well be an ideal solution to provide those additional amenities to employees whilst managing costs.
If you are tied up into a lengthy lease
Assigning or subleasing
Finding a business that would be interested in the space that may no longer be ideal for you is probably the easiest way to terminate a landlord-tenant relationship that is no longer working for you. Depending on your lease terms, you could be able to walk out freely from that lease that should belong in the past.
Agreeing a surrender with your landlord is an effective solution to terminate your lease obligations. Whilst landlords will usually request a premium in consideration to agreeing a surrender, your landlord may have plans to redevelop the premises or may have already found a new tenant with improved terms - in which case this may be a satisfactory solution for both parties.
Re-gearing is an effective way to allow an occupier to benefit from a certain flexibility whilst continuing the existing landlord-tenant relationship. Achieved by renegotiating the terms of your lease so it may suit your current needs, it is essentially a variation of your lease that can be achieved in different ways (i.e. a deed of variation, a surrender and grant of a new lease, or a reversionary lease).
There is no limit as to which term can be renegotiated (from rent to length of term by alienation or alteration provisions), there is no risk in asking and you may never know what your landlord would be willing to accept. It is important not to forget that re-gearing is also advantageous for landlords as it may increase the value of their portfolio, allow them to resolve terms that do not reflect their current needs or perhaps resolve potential dilapidations concerns they may have for the future.
Whichever option is the best for you, it is important to take expert tailored advice to maximise the value and minise the risk associated with your portfolio and our commercial occupier team would be delighted to assist you through the process.