How to attain the ideal office for your business
Determine Your Needs
- How much space do you require?
- What type of building fits your business?
- What is your preferred geographic location?
- Establish your rental expense budget.
Identify Potential Properties
- A thorough market survey of available properties meeting your requirements will be provided.
- List is narrowed by excluding any properties that are undesirable.
- A property tour of the remaining facilities will be scheduled.
Take a Property Tour
- Guided-tour of the prospective properties.
- Two or three properties that would best fit your needs are identified.
- Re-tour specific properties, if necessary, to gather additional information.
Preliminary Space Planning
- A space planner or architect will help determine the most efficient use of space at your two or three top building alternatives.
- The general type and amount of changes required will be established for construction cost estimate purposes.
The Request for Proposal (RFP)
- RFP’s will be prepared and distributed to the landlords of your top two or three building choices.
Select a Building or Space
- RFP analysis based on the RFP responses will be provided.
- Based on the RFP analysis and the preliminary space plans, determine which space would be the best alternative for your business.
- A Letter of Intent will be sent to the landlord of your selected property outlining the terms you intend the lease to be based on.
- First draft of lease will be requested from landlord.
- Lease review by your commercial real estate broker, decision-maker(s) from your company and your real estate attorney.
- Renegotiate and/or accept lease terms.
- Build-out of space begins.
- Construction progress is monitored throughout the build-out period.
- Final walk-through is performed.
- Certificate of Occupancy is delivered.
- Network/telecommunications equipment set up and testing.
- Move in furnishings and equipment.
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?
In order for landlord’s to keep their rental income somewhat steady, the base year method has gained popularity and appears in most full-service commercial leases. The base year concept is fairly simple: the first year a tenant occupies their space is usually set as the base year.
Until December 31 of your base year, all of the expenses associated with your lease will be fully covered by the landlord. A dollar figure will be calculated reflecting the precise cost per square foot of the building expenses.
Your rent will still cover the building expenses that actually occurred during your base year, but any increases in building expenses will be passed through to you in the form of a separate bill. The landlord, or their property management company, will send you a reconciliation statement showing the total of the additional charges.
Are You Represented in Your Office Space Lease?
In any business transaction there is an advantage to having as much relevant information as possible. In a real estate transaction, this is often difficult because of potential conflicts of interest.
It used to be simple. A commercial real estate broker represented the individual or firm with whom he or she had a listing agreement. If a broker with several office building listings is also representing a tenant in their search for office space, it is very difficult for the broker to be unbiased toward his or her own listings. The broker is representing the building owner and has a fiduciary responsibility to that owner. Thus, in this scenario, the potential tenant is left unrepresented, oftentimes, unknowingly.
Legally, the broker must disclose this relationship to both parties by entering into a role of dual agent. As a dual agent, the broker cannot disclose any information, which would put either party at an advantage in the negotiation process. In such cases, neither party, the tenant nor the landlord, are getting the value of the broker’s expertise.
In order to avoid any potential conflicts of interest or mixed loyalties, some brokers act only as tenant agents. The tenant’s best interests are always kept at the forefront, because the broker is not also representing landlords, which could prejudice their loyalty toward their client.