In today's market, many occupiers are finding that relocation has become increasingly cost prohibitive. While a competing facility may offer a lower rental rate, the total cost of moving can be significant once make good obligations, racking relocation, fit-out costs, operational downtime and transition expenses are taken into account.
For many industrial users, these costs can run into hundreds of thousands of dollars, materially reducing the financial benefit of a move.
As a result, landlords looking to attract tenants away from existing premises need to be more flexible in their leasing approach. In many cases, relocation only becomes a viable option when landlords provide incentives that help offset these upfront costs and minimise business disruption.
This can include:
- Extended rent-free periods
- Early access for staging and relocation
- Waiver or reduction of make good obligations
- Fit-out or capital contributions
- Flexible commencement arrangements
With relocation costs continuing to rise, incentives are increasingly becoming the difference between a tenant staying put and making the decision to move.
For occupiers, the focus should be on total occupancy cost, not just rent. For landlords, providing flexible incentives such as rent-free periods, early access and delayed commencement can be critical to facilitating a smooth and commercially viable transition.
