6 (legitimate) reasons that it may be time to find a new space
Since I started in logistics in the late 80’s with 3M Company (NYSE: MMM), I have been in charge of numerous office moves and consolidations. For example, at Panther Premium Services, because of the acquisition of 2 air freight forwarders in Chicago, we had to consolidate 3 offices to the ideal location in Elk Grove Village (our original office was in downtown Chicago, a 5 minute commute for me). More recently, we moved our Revolution office from Seville, OH to Wadsworth, OH (20-minute drive between the two).
Below are 6 reasons to relocate offices (there are more, e.g., being closer to your vendors/suppliers, tax credits, etc.).
COVID has taught us many lessons. One is that a much higher percentage of employees can be just as effective, sometimes more so, by working from home. This obviously reduces your necessary office footprint. This could be great; people are more productive with more room.
This also provides you room for future expansion. Or maybe you decide to convert the additional space into something you’ve been considering, e.g., break-out rooms, private rooms, kitchen, an extra conference room, etc. However, if 20% of your workforce is now working from home, that is a lot of extra space. It might be time to down-size and reduce your rental cost by 20%; or get a better space for the same money.
Either way, it’s time to look.
Today, most people don’t want to drive more than 30 minutes to get to work.
This is a real barrier to hiring. You may have located to the perfect spot, but the average employee drives 45 minutes each way. Commute distance equals stress on employees. Calculate all of your employees commutes and you may find your “perfect” location is far from perfect. Every 30 minutes of commute time you lose about 15 minutes of work time for a whole host of reasons. If you can reduce their commute from an hour to 30 minutes you can pick up a half-hour of work time per day. That leads to a lot of extra time if you have 20+ employees!
By the way, at Revolution, 80% of us live in Wadsworth…bonus!
You may have located your office because of the building and space, but you quickly find that it’s hard to recruit quality talent within a certain radius. The problem could be big enough that it forces you to relocate.
I worked in Manhattan for a number of years and found the talent we needed couldn’t afford Manhattan, so we had to recruit in the boroughs with easy access to the subway systems. Regardless, look at your own constraints and figure what you need to do to maximize your talent pool. Without the right people you will never grow your company as turnover will eventually catch up with you. It’s just a matter of time.
I’ve dealt with a number of companies that wanted to save a few dollars on their office and labor and then realized their miles away from their customer base. Post COVID it will still be important for face-to-face meetings, whether it’s sales or operations personnel. There might be a way to have your cake and eat it too – be close to a solid labor pool and nearer your customers. In other words, try to address as many factors as possible.
We loved Seville, OH but it’s smaller than Wadsworth in population and the Wadsworth Chamber is much more vibrant and active. Wadsworth has already promoted us to all of their members, and it led to a lot of new business. Our exposure has quintupled overnight.
Like I mentioned earlier, if you are acquiring other companies, it might be time to consider relocating offices for two reasons. To mitigate the turnover of new employees from the acquisition and it might be a buyers’ market so you can improve on your current lease and earn some tax credits.
Having said all of this, you might ultimately decide that based on all factors that you don’t move at all. Just know this is something you should evaluate once a year to ensure you are not leaving money on the table.
If you own your current building, maybe you can turn it into an investment, generate rent, and use the excess money to help pay down your future lease amount. My final message is, don’t take any of these factors for granted as they can give a material boost to your bottom line – immediately.