Friday, November 24, 2017

Five Unintended Consequences of a Commercial Real Estate Move

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As you pull into your business home, you realize all of the parking spaces are consumed - and you're forced to park in the adjacent lot.

When you enter the front door, you are greeted by several employees who co-habitate because your office space is insufficient for the body count of your company.

A quick foray into the warehouse convinces you the new shipment of raw materials will have to wait - you simply have no place to store them.

All the above are consequences of occupying a space which is too small for your operation. OK. You've made a decision to relocate. So, let's discuss some of the unintended consequences of a commercial real estate move.

The move costs way more than you budgeted. Suddenly, the old office furniture looks tired and dated and you decide to replace it. Your new business city of residence requires a UL rating be updated for ALL of your machinery. If you'd stayed put, this cost would have been avoided. Simply moving your warehouse racking from the old place to the new place now requires a seismic test, a high pile storage permit, and a racking permit. That electrical service you believed was sufficient will now require a costly upgrade to efficiently power your presses.

You lose key employees. Unemployment in Orange County is at a very low percentage currently. Consequently, good employees are in very high demand. A simple relocation - which may add a few minutes of commute time - could cause a key employee to test the market with another employer.

Suppliers are less accessible. Ready access to your material suppliers is huge. If your move creates more lead time for your suppliers or costlier shipping - an unintended consequence occurs - your products become more expensive to produce.

Customers can't find you. Especially true in the retail arena - you build customer loyalty over time - with a location that is easy to find. A move - even a few blocks away - will cause some customers to take their shopping spree on line and avoid the traffic.

Disruption is enormous. If your employees catch wind you are considering move - the buzz around the shop becomes akin to an episode of The Office - no one gets anything done while anticipating the new location. Some companies are fortunate. The move is planned and executed with the precision of a Seal Team 6 mission - business closes in the old location on Friday at 5:00 PM and re-opens without a hitch in the new location at 8:00 AM on Monday. Reality would suggest the opposite is true - computer cabling is lost, the wrong carpet is installed, your internet service provider thought the move was next week, SCE is tardy delivering the new power panel, your customer service line isn't forwarded, etc.

All of a sudden, parking in the adjacent lot doesn't seem so bad.

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