Many companies, including startups, consider relocating their offices as their business expands or as they review costs. However, an office relocation involves many procedures and expenses that differ from a residential move. In this article, we clearly explain the key points to watch for when relocating an office and the steps for signing a lease agreement.
What should you watch out for when relocating an office?
To make an office relocation successful, it is important to understand the key points in advance. Below are the main items to keep in mind.
Make sure no procedures are missed
When an office is relocated, the company’s principal place of business changes, so notifications must be filed with the Legal Affairs Bureau, the social insurance office, and the tax office. In addition, be sure not to overlook the following procedures.
- Submitting a change-of-address notice to the post office
- Notifying business partners of the address change
- Arrangements for electricity, gas, water, and telephone services
- Booking a moving company early
- Hiring a renovation contractor for the new office
Create a well-planned relocation schedule
It is not uncommon for an office relocation to take around six months from decision to completion. Because termination notice is often set at more than six months in advance, you should prepare a schedule with sufficient lead time. It is important to coordinate with employees and adjust the timetable so that operations are not disrupted.
What are the steps for signing an office lease agreement?
Signing a lease agreement proceeds step by step, from gathering information to moving in. Let’s review each step in order.
Step 1: Gather information
Before you start looking for a property, check the following information.
- Contract type：Understand the difference between a standard lease and a fixed-term lease
- Rent-free period：Check whether there is a rent waiver period of about 1 to 3 months
- How rent is calculated：Rent is often calculated based on gross floor area, including common areas
- Building management quality：Check cleaning conditions and emergency response arrangements
Step 2: Create a financial plan
Office relocation involves a wide range of costs. The main cost items and typical ranges are as follows.
| Cost item | Typical range |
|---|---|
| Security deposit / guarantee deposit | 6 to 12 months of monthly rent |
| Interior construction costs | JPY 100,000 to 200,000 per tsubo |
| Restoration work (small to medium scale) | JPY 20,000 to 50,000 per tsubo |
| Restoration work (large scale) | JPY 50,000 to 100,000 per tsubo |
| Moving costs | JPY 20,000 to 50,000 per employee |
| Disposal of unwanted items (2-ton truck) | JPY 70,000 to 80,000 |
Step 3: Choose a property
When selecting a property, focus on three factors: location, future suitability, and the property’s condition. Because there are various options, including monthly offices and shared offices, it is important to choose a property that matches your business size and growth outlook.
Step 4: Sign the lease agreement
Once the property has been decided, you proceed to the contract after adjusting terms with the landlord. The key to avoiding problems is to sign the agreement only after fully understanding the important explanation. The contract will specify the rent, leased area, handover timing, and other terms.
Step 5: Move in
Once the various payments have been made and the keys have been handed over, you can move into the new office.
Frequently Asked Questions (FAQ)
Q. By when must notice of office lease termination be given?
Generally, termination notice must be given six months in advance. Be sure to check the wording of your lease agreement.
Q. What is a rent-free period?
It is a period after move-in during which rent is waived. Taking the moving period into account, many cases provide about 1 to 3 months.
Q. What is the difference between a standard lease and a fixed-term lease?
A standard lease cannot be terminated without the tenant’s consent, while a fixed-term lease ends when the term expires and requires a new contract. Rent may be revised at the time of renewal.
