Do you know how much m² will be needed to support your growth in 3 years, 6 years or 9 years?
As your business evolves, so will your needs. Flexibility in your rental commitments is essential to ensure that they don't prove restrictive over time.
Here are 5 tips to help you add flexibility to your leases.
Olivier Neuman
Associate
Photo of Thibault Poirier
At Samsung
Rent too big and sublet your surplus while you grow
To make your rental commitments more flexible, we recommend over-letting and subletting.
Some companies choose to take on larger premises than they need from the outset, and sublet the excess.
There are several reasons for this:
- While subletting can represent a financial risk, this remains limited in areas with low vacancy rates (Paris Centre, Paris QCA, etc.).
- This option allows you to absorb your growth over time by limiting the rental charge to the surface area you need.
- In demand, competitive rental sectors, taking on a large surface area can help your candidacy and, in particular, prevent landlords from subdividing their buildings.
- If you opt for an entire building, which you can dispose of independently, you'll gain in ease of management. You'll also be able to create synergies that will boost your internal innovation by welcoming like-minded companies onto your premises, as in the case of corporate working.
The right solution for every situation
We helped one of our customers, a major player in the tech sector, to lease a 7,000 m2 building in the CBD.
Their initial requirement was for 5,500 m2, so 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, enabling them to adjust their space requirements.
Our customer chose to take the risk of subletting, and it paid off.
Add an additional exit option to the usual 3/6/9 maturities
Lease deadlines are not always adapted to your company's strategic stages.
To limit constraints and be able to move without delay, it is possible to negotiate one or more exit options in your lease, in addition to the usual deadlines (3, 6 and 9 years).
Depending on the geographical area and the balance of power between lessor and lessee, a severance payment is usually requested. It is generally calculated in proportion to the support measures obtained at the start of the lease. It is therefore essential to negotiate them well.
You can also think in terms of flex ready, i.e. right from the start of your construction phase, design layouts to facilitate the implementation of a flex office organization, which can be deployed during the life of the lease without any additional work. In the current context, our customers are increasingly demanding this type of support.
Negotiate the possibility of surrendering or taking over additional m² during the lease term
During the course of a lease, it's a good idea to be able to increase or restore floor space in the event of major changes in your workforce and requirements.
Integrating the possibility of reducing your m² between two deadlines can give you real flexibility.
In the event of unexpected growth, we advise you to plan for a preferential right to any space that becomes available in the building. This will give you priority over other applicants from outside the building.
The right solution for every situation
To support several of our customers (industry and investment funds) with medium-term external growth projects, we included a preferential right in the negotiations.
This enabled us to offer them the possibility, during the course of the lease, of taking over additional surface areas within their property complex, in the event of a third party vacating the premises.
For a shorter commitment, opt for derogatory leases or
subleases.
If the minimum fixed term of a standard
lease (3 years) seems too long, other solutions offer a shorter commitment.
Overriding leases or subleases are sometimes offered for 1 or 2 years. We recommend that you consider these options.
But beware: fitting out premises so that you can work in good conditions comes at a cost, and this must be taken into account in relation to the short commitment period.
The right solution for every situation
We recently assisted one of our customers in the consultancy sector with the transfer of one of their group's activities. To enable the entity concerned to take the time to build its new corporate strategy and anticipate its longer-term growth needs, the option of a 2-year sublease in plug-and-play premises was chosen after comparing the various 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 design and construction periods, you can speed up your move-in.
Once you're on the premises, flexibility is a two-way street:
- If your needs are reduced, it is possible to release them with short notice (generally 1 month).
- If, on the other hand, you're expanding, it's easy to take on more workstations or space on the site.
Of course, this flexibility comes at a cost, as coworking spaces are more expensive than traditional office leases over the long term.
The right solution for every situation
When the timing is tight, this option can be a real advantage. This was the case for one of our customers whose head office was spread over two buildings. As one of the sites had to be evicted by its owner, it became urgent to move the teams quickly.
As one of the sites had been evicted by the owner, there was a time constraint requiring rapid repositioning. We advised our client on a suitable co-working offer, while we supported the group in defining and implementing its new reunified headquarters project.
In a nutshell, key figures
In the 1st quarter of 2022, coworking operators have regained their leading role
10%
of all volumes placed in the capital
14%
in the Paris Central Business District (CBD)
4%
of leased space in this sector
You need to take this into account right from the start of your project.
The commercial real estate market is constantly evolving, and the balance of power between landlords and tenants is not the same everywhere. To ensure that your project runs smoothly and efficiently, you need the advice and support of experts in the market, workspaces and lease negotiations.
Do you have a project in mind?
Our Real Estate Services team is at your disposal to analyze your situation and your specific needs, and to answer any questions you may have.
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