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Corporate Expansion Planning

Planning for the future growth of your company should be an important part of your office lease strategy. What is the expected growth in revenues and client base over the next 3 to 5 years of your company? Will your current office accommodate that growth? What is your landlord’s opinion about expanding you? Can you negotiate the right to other space in the building? What is the mix of tenants in the building and will they take all the vacant space before your company is ready?

Not being able to hire additional staff or recruit the talent your company needs because you don’t have the proper space for them to work in can cost your company thousands of dollars. You must have the foresight and planning to prevent these if at all possible. On the other hand, if you are overly optimistic about your growth and for unforeseeable reasons that growth doesn’t come, you may be stuck paying thousands of dollars for space you do not need.

Corporate Expansion Solutions

At Dallas Office Space for Lease we want to sit down with you to understand your vision for the company and then help you design a lease document that will most accurately achieve those goals. We have a tool belt full of tools that can be used to solve companies expansion or contraction needs.

Properly Sizing Your Initial Office

Your initial office space should be large enough to staff your current needs as well as a realistic expectation of future hiring. As a general rule at Dallas Office Space for Lease we recommend you estimate 400 to 500 square feet for every current employee and then add about 15% for normal growth. Even if your growth expectations exceed this most of the time you can shoe horn additional staff into this initial footprint for the first 18 to 24 months of your lease. If you are like most companies we deal with it is hard to predict much beyond this horizon anyway.

Must Take Options

After evaluation of growth potential, some of our clients at Dallas Office Space for Lease have predictable measurable accelerated growth. For these companies often a Must-Take Option makes sense. There is no reason to take and pay for today all of the space you will need 6 months from now but you are certain that additional hires will exceed your companies current space foot print. The problem is if you don’t commit to the space in your lease the landlord will continue to market and lease that space to other prospective tenants.

For these clients we recommend a Must-Take Option. In this clause you are contractually agreeing to take down additional space at a specific time in the future. At that time you will begin paying rent for the additional space. This is very attractive because often you can plan for the additional employee’s furniture and telecommunications needs even though you are not actually occupying or paying for the space. Additionally, because you have agreed to a date certain for the additional space, the landlord cannot lease the space to anyone else thus protecting it for you.

Right of First Refusal (ROFR)

For those clients who have strong expectations about short-term future growth but cannot pin down the timing or have other variables which might prevent that growth need, we may recommend a ROFR. With a ROFR, the landlord is free to continue leasing space you suspect may be necessary for future expansion, however; they are unable to lease that space until the get your release of the space.

This is how it works. When the landlord procures a bon-a-fide third party offer, usually in the form of a Letter Of Intent (LOI) for the space, they must present that offer to you. You then have a pre-negotiated length of time to match the terms of the third party offer. These terms include both rate and term of lease. If you accept you will begin leasing the space, and if you reject, the landlord is free to move forward toward a lease with the new tenant.

The benefit of this tool is that you don’t have to decide about your commitment to the space until the landlord finds someone else to lease it thus triggering the ROFR. The down side of this approach is that rarely are you ready to take down additional space at the precise time that the landlord finds someone else to lease it.

Right of First Offer (ROFO)

Growth and expansion require careful planning. Sometimes, it will not bring you the profits that you expect.

The decision to extend the scope of your business must be a result of thoughtful consideration of various factors, including the financial, logistical, even your emotional readiness. The rule of thumb is that you should only expand when there are untapped opportunities that can benefit your business. There may be a niche that you want to capture; or a location not serviced even by your competitors.

Expanding operations does not always mean more profit. You may be doing more volume by adding a second and third store and working harder, but with the additional overhead, you may not make any more money.

Dallas Office Space For Lease knows the important questions that you need to consider before embarking on an expansion.

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