Change Offices During Covid-19 | 5 Things To Consider

change offices : Organizations have implemented the remote work model on an unprecedented scale. We all probably remember the initial euphoria related to this issue, which began to give way to discussions about threats a few months later, incl—deterioration of communication between employees or the lack of direct meetings. Currently, more and more time is devoted to the in-depth analysis of the impact of the new reality on the organizational culture and all key business processes. This is an area of ​​great interest not only to companies but also to sociologists and psychologists. Many organizations are now adopting hybrid solutions and defining a “new normal.” Part of these strategies is going back to the office.

The new situation also affected the office real estate market, and its participants had to redefine their situation and deal with the challenges together. After almost a year and a half, it can already be said that the pandemic changed the dynamics but did not disturb the basic principles and standards prevailing in institutional office leasing. Fixed-term lease contracts require tenants to decide and secure their needs and interests in advance. It has never been an easy task, and it is now even more difficult due to the more unpredictable future.

So what to consider when deciding to change offices in the times of COVID ‑ 19? We will try to discuss the most important aspects below.

If possible, plan your change offices in good time.

When deciding on a potential change offices, start by checking how much time is left in our company’s current lease. With an area smaller than the average lease size for the Warsaw market, i.e., 1,200 sq m, 12-18 months before the expiry of the contract is enough to consider the available options. Non-standard requirements, such as the integration of several locations or the fulfillment of specific technical requirements and securing a large area by the most prominent tenants, require much more advance notice.

Initially, the pandemic closed the borders of many countries, which affected global supply chains. The problem with the availability of the components necessary to finish the offices or the risk of timely deliveries turned out to be a big challenge for landlords and contractors of arrangement works. Administrative processes related to the commissioning of entire buildings, including office buildings, were also temporarily suspended.

Meetings in the form of endless tele- and video conferences and remote work also make it difficult to conduct negotiations efficiently. Many parties are involved in them – not only the tenant and the landlord. It can take much longer for so many parties to coordinate. After agreeing on the financial and legal conditions, even half a year may be necessary for the design and construction process itself. In the case of the largest tenants, the finishing work schedule extends even over several quarters.

Renegotiation of the lease agreement, or how to achieve a favorable compromise

Are you looking for savings, but it is difficult to determine how much space your company will need in the next few years? Perhaps the renegotiation of the current lease agreement will be an appropriate solution and will allow us to reach a compromise in reducing costs. In this case, it is necessary to consider the owner’s needs, where our office is located, and the real possibilities of obtaining a license. It is certainly worth taking advantage of the advisor’s experience. The key to success will be to create real competition between the owners of alternative locations and the current landlords. The obtained conditions are often presented at the end of the process in a Stay vs. Go analysis.

Sometimes the most beneficial solution for the company may be a contract slightly shorter than the standard five years. However, it is always associated with a lower budget for adapting and refurbishing the space and a smaller package of financial incentives (discounts and rent exemptions). Most often, the longer the lease period we can accept, the more we can expect from the office building owner.

Rebuild the office until it is crowded

If your office’s lease contract does not end anytime soon, and the space you are currently occupying is not satisfactorily supporting your team’s needs, redevelopment may be necessary. Such a projects also requires proper preparation and competence. The challenge here will be coordinating subcontractors’ activities and obtaining the necessary landlord’s approvals. Before a pandemic, issues such as financing the required work were usually agreed upon. The scope and responsibility for possible surface damage were decided upon. Now, other aspects, such as risks related to the safety and health of executive teams or employees of the company, play an increasingly important role. However, the period of widespread remote work may turn out to be an ideal moment for changes for many companies and an opportunity to implement the necessary improvements,

A good time to move your business

In the first quarter of 2021, over 70% of signed contracts were lease contracts for new space, both in buildings already completed and under construction (the so-called pre-let). This is a positive signal for the real estate market. Despite the general uncertainty, companies continue to develop and want to have modern offices adapted to changing needs. Currently, it is also easier to negotiate better lease terms and sign a more favorable contract in financial terms, if only due to the relatively high vacancy rate, a large number of sublets, and the concentration of vacancy in several buildings.

Creating an appropriate workspace adapted to the organizational culture and the new reality is essential for many companies. Many tenants ask themselves how to work in a long-term context and not just now in a transitional period.

Experts dealing with the Work Environment Strategy and Change Management have a lot of work. Thanks to consultations, we can determine what is most important for our company, as an employer, on a strategic level and then create a space in the office that will support our business goals through the appropriate arrangement. From this perspective, the ending lease contract, the vision of moving or redesigning the office, can be treated as an excellent opportunity for a “new opening.”

Plan, secure flexibility, seize the opportunity.

change office : Early determination of our company’s needs will allow for appropriate business risk management and the use of rare opportunities in the office market. Remember that securing a flexible framework for expansion or space reduction in a contract is not easy to achieve but not impossible. The support of an experienced advisor will be beneficial here.

We have been operating for over a year with the pandemic in the background, so it is worth summarizing the situation in the office space market, for example, on the model of Warsaw, where the number of building permits has drastically decreased. We will have to wait for new projects. This, in turn, creates a risk that the current office space will be filled, and in the years 2022-2023, the supply will be negligible. There may be a risk of space shortage during this period. It will undoubtedly be more challenging to obtain such favorable offers today.

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