How to Get Out of a Commercial Lease?

The business landscape is an ever changing one. New consumer trends, an improvement in Google’s algorithm and constant new technologies that allow new and exciting messages to be spread quicker and with more efficiency than ever before. It is a very interconnected environment that isn’t tied down to the past but instead flows into the future and is open to anyone to jump in. One of the biggest shifts that has come with the rise of video conferencing software and especially with the lockdowns and restrictions imposed due to the outbreak of COVID-19 has been an increased prevalence to work from home and less and less reasons for why a company should be based in a traditional office space.

Property is expensive, especially in large urban areas which is precisely where the most ambitious entrepreneurs are looking to set up shop to bring in the largest crowd of both staff and clientele. No pain no gain is the mentality on the frontlines. Unfortunately, the idea of a more prestigious office being linked to company reputation has come crashing down with the spread of COVID-19, forcing offices to limit the number of workers or in some cases, shut their doors. With unemployment skyrocketing and businesses losing the majority of their income, the government has instituted subsidies such as the Emergency Wage Subsidy to ease the financial burden. Currently in the midst of a second lockdown in the beginning of 2021, the government’s funds are becoming simply not enough for businesses that fall further and further into debt. As vacancy rates for downtown office spaces begin to rise, many are considering alternatives to their office leases. After that, the only problem becomes getting out of one to be able to wipe the slate clean and start fresh.

Ways To Get Out Of Your Commercial Lease

  1. Subleasing: Involves you finding another individual to pay your monthly rent (i.e. another individual renting out the whole or part of the property you’re renting from the landlord). Rates of subleasing have recently spiked during the pandemic as companies look for ways to lower costs while waiting out the pandemic to see whether or not office spaces will make a comeback post-pandemic. This allows businesses to play it safe by saving time and money while not completely foregoing the office workspace model in the future. Just make sure to inform your landlord beforehand.
  2. Buying Out: Negotiating with your landlord to pay a sum to compensate for the remainder of our lease term. Normally, you’ll offer up a sum equivalent to the next few months worth of rent which would end up saving you more money as opposed to abiding by the terms of the contract until the end of the fiscal year and end up paying more. Imagine it’s March and rent is $1500/month. You still need to pay $15,000 until your lease expires assuming its maturity date is Dec 31. You can negotiate to pay out a sum $7000 to leave now and save $8000 in the long run. If the landlord is optimistic in their prospects of finding another tenant, they’ll be sure to jump at the opportunity, it’s all a matter of timing.
  3. Breach by the Landlord: Probably the easiest said but hardest to put to bed is leaving your lease on the terms that your landlord has breached their obligations such as cleaning and maintenance services which has interfered with the business’ operations. While this does not allow you to stop paying rent, it could allow you to sue for damages suffered in court. However, this is almost certain to turn into a lengthy legal dispute so it isn’t recommended for those that want to get out fast.

Setting Up Headquarters Without a Headquarters

The modern world is constantly shifting and changing, as is our understanding of it. One popular trend that has risen to prominence over the past few years has been virtual office spaces. When you look to rent an office in Toronto, you might be expecting to find luxury properties with sky-high rates only available for the massive corporations that can afford the privilege. Maybe that was the case before but the winds of time have changed. Virtual offices have levelled the playing field by bringing everyone onto the same medium: the worldwide web.

The Benefits of Virtual Offices

Virtual offices are a service that allows your business to perform the functions of a traditional business while letting you and your staff work from home without ever having to take the arduous commute to the office. With virtual offices, you won’t have to pay rent on an office space yet you’ll still be able to maintain a physical presence. This is because virtual offices offer the ability to have your business address be in the centre of the entertainment district in downtown Toronto whilst you and your employees stay home and work from the suburbs, all while paying a small fraction of the price that you would have paid if you had a physical office space there.

At your business address, you are provided with a receptionist which will arrange meetings with your clients to make your business maintain its professional image and help the virtual office be more real. Meeting rooms are also offered at any time with tables, beverages, projection software and whiteboards. Most importantly, the first impression customers get of a business in-person is over the phone. Virtual offices offer phone answering and voicemail services on landlines that aren’t available on mobile as well as a mailing address, management and forwarding.

Less Limitations, More Possibilities

Possibly the greatest advantage that comes with a switch to virtual offices is their ability to open up the world of possibilities to a business of any size. Brand image and reputation are crucial when it comes to creating a business and virtual offices allow your business to be on the same playing field and compete with the juggernauts. Another massive upside is their ability to bring in talent from far and wide. Since virtual offices make remote employment the primary mode of work, you free yourself up to hire from not just your region, but from all over the country if not the globe.

All of this is also ignoring the fact that remote employment for higher creativity labour is more productive. That is to say people performing more thought-based and less menial labour are more productive in an open and flexible environment rather than in a closed one. Working from home gives your employees the much needed flexibility they crave and can reduce rates of staff burnout. After all, if your staff morale is low, there is no way they will be able to give you their best.

Conclusion

In short, there are always more possibilities just around the corner, you just need to have the initiative to take that first step. When it comes to commercial leasing, consult with your landlord or look through the agreement to see if any articles were breached that would give you grounds to get out of the lease. Virtual offices are soon to become the norm and with financial security being a pressing matter now more than ever, they offer a quick and affordable way out while also giving you some additional perks to keep up with the competition. If you want to learn more about virtual office spaces, visit Agile Offices website today for more!

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