How a business was nearly crippled by a lease renewal hiccup

I often offer words of caution about why you need to keep on top of property lease portfolios. Without the right expertise and systems in place, things can go badly wrong – as the following example illustrates…

I know that warnings sometimes don’t hit home until you are confronted with a real life situation where you run into strife. I guess it’s human nature that we’re more likely to react when we are under real threat rather than in advance of a potential threat.

The real tragedy that can beset a business if it is not carefully managing property leases is illustrated by the recent case of an international company running an operation in New Zealand.

They found themselves in the terrible position of having their lease run out without realising it. Their landlord had delivered an ultimatum to be out within a fortnight, or sign up for a new 15-year lease term at a rental 70 percent higher than their current lease!

Saying they were between a rock and a hard place is putting it mildly.

If they chose to leave, they had the near impossible task of finding new premises virtually overnight and shifting 100 people and millions of dollars worth of equipment from their existing premises.

The situation was little short of dreadful.

And it had happened for a reason that is all too common in business today; the need to focus heavily on productivity, which unfortunately comes at the cost of spending less time focusing on management areas such as property leasing.

It sounds a simple thing to overlook, but it takes a specific focus and skill to ensure the lease is well managed, and that when the time comes, the organisation is in a position to either renew the lease or move on. This all requires strategies and systems to ensure the best outcome.

I was able to identify a number of solutions to help this company, and in the end they were able to renegotiate a more manageable lease.

So here’s my shameless plug. Parallel Directions will work with a business proactively, using some tried and true systems and strategies to make sure this kind of last minute crisis never happens.

Our approach ensures tenants are always on the front foot managing their lease and negotiating with landlords. Near fatal hiccups should be avoided at all costs!