Are you locked into a five-year commercial lease, but need to vacate your office now? While it may seem daunting, it is possible with professional help. Below, we’ll take a closer look at commercial leases, and how to surrender them without paying crippling fees.
First of all, what is a commercial lease?
A commercial lease is an agreement between a business and landlord for use of a commercial property, such as an office building. The commercial lease agreement will be signed before the tenant moves into the space and will include details, terms, and conditions like:
- The length of time they will inhabit the building
- The changes that the tenant can and cannot make to the space
- How much rent is to be paid and how regularly
- Names and details of tenant and landlord, details of building
- Cost of bond
- A condition report (if applicable)
- Make good clause.
It’s very important that when you are signing a new commercial lease, you engage the help and advice of a professional tenant advisor. However, we’ll discuss that process in another article.
How do you end (surrender) a commercial lease?
Once you’ve signed your commercial lease, you can move into your office or commercial space. What follows may be years of successful business activity, with plenty of milestones to celebrate. Or, you might realise after just a year that this commercial space isn’t right for you and your business. That can be a tough issue to navigate, but it certainly isn’t the end of the world.
In fact, this is where we at Niche Tenant Advisory, excel. The process of surrendering a commercial lease involves a few steps, which we’ll take a look at below.
Why do you need to surrender your lease?
First of all, why do you need to surrender your commercial lease? There are a few reasons as to why businesses do surrender their leases, such as:
- A rapidly growing business, more employees and therefore, additional space required.
- Fewer staff and therefore, no longer wanting to pay for a large office space.
- Financial difficulties and an inability to continue to pay the current lease, which was a common issue during and after the pandemic.
- Relocating to another state or even another country.
The bottom line is that you should have a good reason for surrendering your lease, because it isn’t a decision to be made lightly.
Decide whether you really do need to surrender your lease
Surrendering your lease will inevitably come with financial costs, so if there are other ways to solve your problems, you should consider these options. Some of the issues that businesses come across can be solved by other means.
For example, if you are thinking of surrendering your lease because your office space isn’t exactly suited to your staff numbers, or your way of working, you might be able to solve this issue with a refurbishment or new Sydney office fit-out. If you think that might be the case, speak to an office design and fit-out company to get a better idea of your options.
A tenant advisor can also help you determine better options, and whether or not it’s really worth surrendering your lease.
Locate professional advice
Finding a Sydney commercial tenant advisor is one thing, but finding a company that truly cares and has the right experience is another. At Niche Tenant Advisory, we work around the clock to ensure the best possible results for our clients.
It’s critical that your tenant advisor has extensive knowledge of the commercial real estate field, expertise on negotiating and a careful understanding of the lease surrender process. If they are lacking in these areas, it could mean a less than desirable financial result for you and your business.
On the other hand, if your advisor has been in this position time and time again, they’ll know exactly how to get the best for their tenants through the negotiation process. At Niche Tenant Advisory, we’re ready to do battle for you.
Once you’ve settled on your tenant advisor and they believe a lease surrender is the best course of action, you’ll need to approach your landlord.
Approach your landlord and commence negotiations
Negotiations can be tricky, which is why this is the most important part of the process. It’s critical to know what you have to stand on in terms of negotiations, because as the tenant surrendering your lease, there’s not a lot.
Your tenant advisor will handle this stage for you, using their nous and understanding of the property, market and needs of the landlord to negotiate hard. Ideally, they’ll ensure that you pay as little as possible to surrender your lease and ultimately vacate the property.
Some landlords will fight tooth and nail to receive full compensation; that is, the remaining money owed on your lease. But with Niche Tenant Advisory in your corner, we’ll use all of our experience and negotiation skills to get the best result for you.
What happens after your lease has been surrendered successfully?
Once you and your landlord have agreed upon terms for surrendering your lease, you’ll have a date penciled in for vacating the property. You will also have to take into consideration your makegood clause. This refers to the clause that stipulates whether or not you have to return the office to its original condition, or ‘make good’.
After you’ve completed your office relocation and returned the space to its original condition, you can return your keys and breathe a sigh of relief.
Get in touch with a professional Sydney commercial lease advisor today
At Niche Tenant Advisory, we’ve helped clients all over Sydney surrender their commercial lease with minimal stress and a better financial result. We’ll work hard to get the best outcomes for you and your business, so that you can focus on doing what you do best.