Tips for office leasing success
Moving a business to its next level of success can sometimes mean literally moving—to a bigger or better office space, opening up opportunities for growing your customer base or boosting your business’s curb appeal.
The bad news is that finding the best location, the right space, and the best office leasing terms takes a lot of time and resources. Compounding the pressure is that fact that leases last for years, so any decisions reached and terms made will have long-term consequences.
The good news: the right tenant representative can do the lion’s share of the office leasing work for you—at no cost to the tenant. And a skilled tenant representative can typically negotiate a much more competitive lease than someone who isn’t well versed in commercial real estate.
Many businesses don’t realize they don’t have to go it alone, but most national firms rely on tenant representatives to find and negotiate on their behalf for office space. And while some companies have in-house real estate departments, more and more are choosing to outsource the job to local professionals who are experts in their particular markets. Why? Because it saves time and money.
The Play by Play
Just as the seller pays agent commissions in residential real estate, it’s the landlord who foots the bill in commercial real estate. If a tenant has a representative, the landlord’s agent and the tenant’s agent split the commission. If the tenant chooses not to be represented, the landlord’s agent handles both sides of the equation and earns the full commission. Tenants with their own agents have a big advantage when it comes time to negotiate lease terms.
Enlisting a pro can also pay off in fewer headaches and less down time. An experienced tenant representative can manage the entire process, freeing you and your staff to focus on operations instead of diverting critical resources trying to get up to speed on the complexities of commercial real estate. Your representative can assist with expanding or reducing your current space, lease renewals, office relocation, subleasing your space, and even buying or selling office space.
The office-leasing game is complex and time consuming. A commercial real estate broker can ease the burden by providing a number of services, such as:
- Creating a detailed office leasing needs analysis to determine the size and configuration of your ideal space.
- Supplying a complete list of available properties in your market that meet your needs. Keep in mind that a savvy real estate professional is likely to know of unadvertised properties and creative opportunities that others may not be aware of.
- Presenting a comprehensive financial analysis of how the economics of each location stack up.
- Providing objective, expert guidance to help narrow down the alternatives to a short list of 3-4 best picks.
- Preparing detailed Requests for Proposals (RFPs) and delivering them to the landlords of each property on the short list.
- Collecting and analyzing the proposal responses.
- Negotiating office lease terms and possible concessions with the landlord of the chosen space.
Choosing Your Pro
Look for a commercial real estate broker who asks a lot of questions—and actually listens to the answers—about what your business needs and preferences are before he or she starts suggesting properties. In addition, make sure your tenant representative:
- Specializes in the right kind of space. For example, a law firm looking for office space would not be well served by a broker who mainly does retail storefronts.
- Does many transactions in your market and has experience with a variety of landlords and tenants. A locally-focused, experienced broker will provide the insider knowledge and expertise to ensure you’re being represented well.
- Provides unbiased information and doesn’t try to steer you toward a particular landlord or property.
Most businesses will have to deal with either relocating or renegotiating their existing office lease on a regular basis, but it’s hard to be in top form when you only practice every 3-5 years. And it’s not easy to work out a win-win result when the other team—the landlord and landlord’s agent—plays this game for a living. Professional tenant representation levels the field, makes it easier on everyone, and best of all, it costs the tenant nothing. How’s that for a slam dunk?