Sample Chapter Navigating Commercial Property Leases 116 pages on commercial Leasing Timing Your Transaction Begin your relocation process early, because you will be conducting business as usual during this time, you should begin your relocation efforts 4-8 months before your move date. By planning well in advance time will be your ally not your enemy. If time becomes and issue, keep cool, because most economic concessions are made right before the deadline of the transaction. You should avoid telegraphing your need to close the deal quickly. Attempt to work out alternative solutions with your existing landlord rather than reveal that you are under time pressure. Allow enough times to accomplish all of your objectives by establishing a time line of the leasing process. Here is a quick overview of the process. Based upon how much time you actually have to accomplish your move, you may have to compress the time frames suggested. Week 1 Develop a complete definition of your requirements. This could include meeting with all your managers and department heads and perhaps your own architect. If you are planning to use a broker, conduct broker interviews. Week 2 Begin to survey the market and locate available properties that meet your requirements. Begin inspection tours of the most qualified properties. Week 3 Begin making preliminary proposals and open negotiations. Commence the space planning process, allow one to two weeks turn around time for plans. Cost estimates can take up to another two weeks. Week 4-5 Begin reviewing responses and evaluate for counter offer. Review space plans, and cost estimates. Weeks 5-6 Economic agreement should be reached and space planning completed; it will typically will take two or more weeks for review of the legal documentation. Weeks 6-8 Lease contract negotiations take place. If all has gone smoothly you could find yourself at the point of signing a lease. Weeks 8-11 Working drawings for your tenant improvements, based upon previous iterations of your space plan will begin after lease execution. Allow two to three weeks for these plans to be completed. Weeks 11-14 Permits and any required engineering can take from 2 to 6 weeks (or longer) depending on the various approvals required. Some owners will start construction upon application for permits to expedite the occupancy. Weeks 19-26 Depending on the size of the job you should allow 8 to 12 weeks for the physical construction. Based on this typical time line, you should allow 19 - 26 weeks for relocating, if everything goes very well. If time is short, there are some short cuts to compress the time required, but they may be more costly. Another alternative is to limit your choices to buildings with space that comes very close to your needs and making only minor alterations, or looking for sublease space meeting your requirements. The 8 steps of Commercial Leasing Define your requirements Locate suitable property Tour properties Make a proposal to lease Space planning and architectural evaluation Analyze responses Negotiate the lease contract. Close the transaction Define your requirements There are a number of important questions to ask to accurately define your requirements. Doing this in advance will save you time and help avoid starting in the wrong direction. Committing your requirements to paper will also help you as you visit properties to make sure nothing is overlooked. As a broker, there are a number of questions I ask my clients to move from a rough idea of their needs to a clearly defined objective. You will use this information to screen out unsuitable properties once you start to make calls on available sites. Location and General Questions What area and vicinity is of most interest to you? What particular buildings are of interest? Is an office with a view important? If so, what is the lowest floor your company would be willing to locate on? How many square feet will be leased? (A table follows for calculating your requirements) How many people will be employed at this location? What is your annual budget? What length of lease is preferable? Is future expansion important? When does your company intend to move? When does your existing lease expire? What are your parking and transportation needs? Will you need an interior architect? Space Configurations: Number of private office(s) Sizes: Executive ______ Associate _______ Sales _______ Number of open area work-stations: Sizes: 6x6 8x8 8x10 other Number of conference room(s); sizes: Number of storage/supply room(s); sizes: Number of file cabinets; sizes: Number or size of computer room(s) How large a reception area is required? Do you have any special electrical requirements? Do you require any above-standard tenant improvements? Other special requirements? Electrical needs Communication needs Special H.V.A.C. (heating, ventilating and air conditioning) Training rooms Americans with Disabilities Act compliance When you are touring potential locations to lease you are likely to be asked some qualifying questions. You might want to think about what information you are prepared to give up and what you will want to hold back. In a negotiation, information is king and giving up too much to quickly can compromise your bargaining power, especially if time is short. Typical Qualifying Questions owner's might ask. When does your lease expire? What is your budget? What else have you seen? Are you working with any brokers? Why do you have to move? Do you have any other options? Where does the company leadership or employee base live? Who are the other decision-makers? What is your business history? What is your financial condition? What are your growth plans? What doesn't work about the space you now have? Generally you will already have some idea of how much space you need based upon prior experience, research of competing businesses, or franchiser provided guidelines. For warehouse or industrial users, your square footage will be factor of the space required for the storage of goods or placement of equipment. Deciding how many square feet you will need is the next step in starting your search for space. As a rule of thumb, for office users, plan on between 150 to 200 square feet per person. To get a more accurate feel for your square foot requirements use the chart below to calculate your needs. Select your anticipated square foot usage from the range given for each use and multiply it by the number of people needing that configuration. Generally, leases run from three to five years so remember to anticipate personnel growth in your calculations. After you have completed the math for all your uses; add 30% to the total to compute the circulation for corridors and the load factor. 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