By Lynn Drake
Sept. 29, 2011
When it comes to making a move, Santa Claus had it right. It is all about making a list and checking it twice, at least.
The main game is to meet all the requirements before you move, otherwise the tiniest details could become major obstacles.
Step 1: Making a game plan
Sit down with your team and review where you’ve been and where you want to go. Review your current lease for the expiration date and renewal options. Think through the number of staff you have now and what you envision five years from now. Estimate how many square feet your firm needs by multiplying the number of employees from 200 to 300 square feet. Later you will work with a planner to determine all of your firm’s needs but for a start this helps identify a size range.
If your firm is in an existing location review the lease for the expiration date and renewal options. Holding over past the expiration date may cost a substantial amount of money. Start your search at least six months in advance for a small building and 9 months to a year isn’t out of the question for a larger size space.
Envision where you want to locate and what factors are important. On a 1-10 scale, what matters most? This list will enable your broker to help you determine the best possible cities etc.
Step 2: Gaining an ally
Hire a tenant agent, preferably someone with at least two years in commercial real estate who knows the market in your area. As a tenant you should not have to pay any fees for this service and you will save hours of time by bringing in a trusted professional.
With the agent’s help, determine the square footage required, develop a list of prospective properties and determine a budget. You agent will provide lists of properties that meet your needs, set all the appointments and should provide you with a booklet on all the facets of the site for the tours. Making notes in a journal helps finalize your decision.
My top rules for my clients are: 1) Do not fall in love with any building or space! 2) Pick at least two buildings for proposals. In today’s market, there are a number of excellent options.
Step 3: Negotiate
The agent will prepare the Request for Proposal (RFP) and analyze responses.
Landlord incentives may include free rent, special parking spots and improvements. Rates depend on the area, the mortgage, the upgrades and other intangibles. You might negotiate perks. A financial analysis should be prepared on all lease options by your agent so you know the true costs. See our first article the ABC of real estate.
Next, meet with the landlord’s planner to design the space, making sure you capture all needs. You don’t want to agree to a floor plan and then have to change it later because it is very costly to do a change order. Don’t sign any lease until the landlord has priced out your improvements and has agreed to do the deal as negotiated.
Remember, you can walk away from any transaction until the lease is signed.
Step 4: The Final Details
Review the final deal with your agent. Hire a commercial real estate lawyer, someone with an eye for catching the fine print considerations to review the lease.
Now, the Landlord will go to work getting permits and starting construction. Depending on the municipality getting permits can take a week up to six weeks.
Designate a trusted employee to take charge of the entire move process once the lease has been signed. The relocation is a big job and it will be easier if one person is in charge of the entire move.
Treat yourself and your employees to a move-in party and thank everyone for their help in accomplishing the move. With a clear action plan, adherence to methodical steps, good advisors and strong movers you should settle into new space quite confidently.
Lynn Drake is president of Compass Commercial a Troy-based company specializing in all phases of tenant representation for local and national clients. With 20-plus years of leasing experience she helps entrepreneurs and executives identify the right space at the right cost. This is the third of a three-part series on understanding real estate. Reach her at www.compass-commercial.com.