There’s no doubt current market conditions are impacting vacant space in the property lease market. Some businesses are downsizing their space requirements, while others are vacating premises.

The outcome is that landlords have space on their hands and need to look at consolidating the occupied areas of their buildings. In some lease agreements, this can lead to some upheaval for existing commercial tenants. These tenants can end up having to shift around a building, or to a different part of a retail or industrial complex. Often property lease agreements don’t cover this issue. If shifting within a building, or retail or industrial complex is not specified in the lease, a tenant can be at risk.

Moving to another part of the building will incur shifting costs, most likely some fit-out requirements, and there can be challenges in ensuring the new space is equal to an existing location, in terms of size and quality.

For instance, it would be bad news to shift to a new area of a building that might be beside the car park on the ground floor when your previous location had been on the 10th floor with views.

This is where it is critical to have these matters spelt out in your lease. It is important to ensure there are clauses that specify what will happen if you are required to shift to another area of a building, and who will cover the costs of the shift. It also needs to be clearly articulated that a new location is the equivalent of the existing space.

There can be other issues to be managed too such as changing signage, address details, cabling for computers, location of computer servers and a myriad of other details that are costs when shifting.

The key to making sure you are not caught out is your lease and its negotiation.

One should never assume that there is a standard lease document that covers all these issues, so it is important to get the right advice. Not all lawyers and real estate agents have the expertise to ensure all these issues are clearly covered in an agreement to lease; it is more complex than day to day legal conveyancing.

So to make sure you don’t become a victim of the Vacant Space Wars, make sure you have the fine print in your lease sorted.

This entry was posted on Tuesday 14th October 2008 and is filed under Property Leasing. Both comments and pings are currently closed.