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Is now a good time to expand my office space?

If so, how can I hedge my risks?

Unfortunately, there is no cookie-cutter answer for this excellent question. It begins with your assessment of your business model—its viability, your forecast, and, most difficult of all, the market.

If you can confidently make a positive assessment there, then absolutely, now is the time to expand.

Commercial real estate rates are much lower than they were, for example, six years ago. Now is a very good time to get an excellent lease….but it will do you no good if the business falters.

If you have decided you are confident in your business for the next year or two, there are three traditional ways to hedge the risk of taking on new office space. The first is to take on the minimal amount of square footage necessary. It goes without saying, however, that this may inhibit increased staffing without having to revisit the lease and the landlord to expand before the term has expired.

In a market like the one we are seeing, now is a great time to avoid cash outlays as much as possible when taking on a new lease. A skilled negotiator may be able to convince the landlord to take on a number of the necessary improvements to your new office site without you having to make additional expenditures.

Finally, one can hedge risk by taking on a very short lease. Be aware though that this can cut both ways. The market is at a fairly depressed level, and the rate you get today is not terribly likely to be as low as the prevailing rates will be in just a few years.

While such an approach does reduce your risks, it also increases the odds that you will be facing a more expensive lease when your term is up. Again, it comes back (as do so many questions) to your confidence in your business.

The Stone Group

12912 Hill Country Blvd,

Building F, Ste. 201,

Austin, TX 78738

Phone. 512-732-8700

 

NAVIGATION

 


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