The Important Aspects of Business Relocation
Advice from Illinois real estate attorneysBy Nancy Henderson | Last updated on March 3, 2022
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As head of the real estate team at Reda & Des Jardins, Evan Sauer has seen his share of lease transactions. But it wasn’t until his firm got rid of its expensive office space and he began working remotely about 10 years ago that the headaches hit home. The business move, and the challenges that prompted it, he says, “helped me see the difficulties and complexities for our clients and guide them through the process.”
Get Organized for an Office Move
One way to avoid pitfalls in such a move, says Michael Gunderson, a real estate attorney and principal at the Gunderson Law Firm, is by creating a checklist of items you might otherwise overlook. “A lot of the time,” he says, “it’s just helping you see things you would not automatically think of.”
The biggest consideration in choosing a new office is, of course, always location, location, location—especially if customers are walking through your door every day. Also take into account where your employees live when choosing a new location, adds Margaret Christie, a real estate attorney with Golan Christie Taglia who often represents entrepreneurs and owners of family businesses.
“You always have the challenge, if you’re actually in the city of Chicago, with parking … because parking is incredibly expensive and scarce,” she says. If the area is ripe for redevelopment, she notes, keep in mind that the convenient parking garage next door could be replaced by a new structure after you move in.
Leasing or purchasing is a huge decision. If you foresee an expansion, Christie says, “buying probably isn’t going to make sense because then you’re stuck with this asset that you may have to unload if you discover in four or five years, ‘Whoops, this doesn’t really meet our needs anymore.’” You might want to buy or build if you have specialized needs such as foundry acreage or unusually complex technology requirements.
When weighing the lease vs. purchase question, says Gunderson, prepare for the worst-case scenario. “You need to basically go into it as if you are going to fail,” he says. “Is this something that you can easily, or without a lot of difficulty, lease out to someone else, resell, or use for something other than your business?”
Another factor, Christie points out, is where you are in your business cycle. A 30-year-old startup business owner undoubtedly has different goals than a 60-year-old thinking about retirement.
Negotiating a lease can be tricky. Christie urges clients to get expert advice on subleasing clauses and understand the condition in which you must leave a space when you move out.
The planning can never start early enough, Christie says. “They really should start thinking about things at least a year in advance, if not longer,” she says. “I had one client that was in a business that had heavy specialty equipment and they needed a new manufacturing facility. Well, this equipment had to have special teams of people brought in from the manufacturers to move it, but getting them booked takes months and months.”
Be realistic about the type of space you need, Christie adds. “One of the big trends has been this open office space, where poor souls are just put out on little horrible, almost call center, setups where you have almost no privacy. they have discovered— here’s a big shock—that people aren’t necessarily very efficient when they can’t hear themselves think.”
When leaving your current location, says Sauer, be sure to notify your customers and vendors about your new space. “The worst thing that could happen is you have a big customer that comes by and says, ‘Where did they go?’ are they out of business?’”
Do everything you can to minimize surprises, the attorneys agree. If you’re moving into a high-rise, book the freight elevator well in advance. If you’re leasing a new place in winter, turn on the air conditioning to see if it works. Check building permits for upcoming construction that might block walk-in traffic.
Reconnaissance doesn’t hurt either. Gunderson urges clients to drive by the neighborhood at night and assess traffic flow during peak hours. “I’m all for people being enthusiastic and entrepreneurial, but don’t rush the decision,” he says. “It’s an incredibly large decision, and most of the time, the most expensive aspect of your overhead or cost of doing business. Be very diligent and methodical about it.”
For more information on this area, check out our overview of real estate laws.
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