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The Case for Relocating an Office Over Renovation

There’s a widely held belief that it’s more economical for companies to renovate their existing leased space than it is to relocate to new quarters. In many instances this theory will prove accurate.

But often you’re splitting hairs over a few dollars and cents and not talking about true value creation. That’s because there are indirect costs associated with staying in an existing, dated space.

Here’s a look at what to expect if you engage in a remodeling while the office is still occupied:

The construction will be disruptive. Although many renovations to a space can be conducted in off-hours, some work will have to take place during the regular workday. While contractors will likely do their best to make their presence as subtle as possible, taking down walls, ripping up carpet and upgrading the entrance and workspaces makes noise — often a lot of it.

Employees who are used to working in relatively quiet spaces will need to overcome these new disruptions. Employers should be prepared for a decrease in productivity while team members acclimate to the noise, clutter and distractions that come with a remodeling project.

renovating an office

Strangers will pass through. Corporations choosing to renovate an existing space should anticipate having strangers going in and out of the workplace during the daytime and after hours for weeks or months, depending on the project’s scope.

When more people are about, there’s a greater opportunity for invasion of privacy or a breach in security. A company might need to implement added security measures to protect sensitive information or costly materials in the space, particularly if renovations are done after hours.

Tenant improvement dollars won’t go as far. When tenants choose to undergo an occupied remodeling, the construction work often becomes costlier than if the space were otherwise vacant: Construction must be done in phases, in an attempt to minimize tenant disruption and code compliance work is frequently required for a renovation of an older space. The bottom line is that tenants can expect to have less to show for the capital used to improve a space.

Here are a few of the reasons why relocating makes more sense for many companies:

1. The atmosphere can be enhanced.

Businesses that have remained in leased space for a decade or more have the perfect opportunity to invest in building with a new, more vibrant atmosphere when relocating. Offering an inspiring office environment and a people-focused corporate culture are a necessity in attracting and retaining talent. The decision to relocate as opposed to renovate gives businesses a clean slate for infusing additional amenities into the workspace.

2. Interruptions in work flow can be avoided.

When you lease a new space, you’ll have the opportunity to complete all the tenant improvements before paying rent. Landlords might provide tenants with an early occupancy so the company can first install new furniture, complete the cable work and prepare to move the team.

In many cases, the move can be accomplished over a single weekend. This prevents a major disruption of work, so productivity remains high throughout the entire relocation. If the move is executed properly, the only distractions for the team involve setting up the new work area and adjusting to the new environment.

3. The company’s brand is reinforced.

When you relocate your business, you have a golden opportunity to reinforce your company’s brand to not only employees but also clients, vendors, family members and friends when they pay a visit to the office.

The experience of viewing a beautiful space versus seeing an ongoing remodeling project covered in tarps, dust and construction materials can make a huge difference in perceptions of a company.

This article originally appeared on Entrepreneur.com.

Tucker Hughes is managing director at Hughes Marino, a global corporate real estate advisory firm that exclusively represents tenants and buyers. As head of Hughes Marino’s Orange County and Los Angeles offices, Tucker specializes in tenant representation and building purchases throughout Southern California. Tucker makes frequent media appearances to speak on the future of commercial real estate, and is also a regular columnist for Entrepreneur.com. Contact Tucker at 1-844-662-6635 or tucker@hughesmarino.com.

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