They say that in real estate it is all about location, location, and location.
I would argue a bit on this. Timing is just as important or maybe even more important, particularly when renewing your lease or securing new office or industrial space. We always counsel our friends and clients to start early to renew their lease or seek a new location. One of our oft used phrases is “make time your friend, not your enemy”. As this piece continues, I will explain why this is vital to keep in mind. Another thing to remember is that like most things in life – it might take longer than we planned.
As a business owner or manager, you have a myriad of tasks and responsibilities on your shoulders. It’s not realistic to be able to drop everything to deal with your office or industrial lease. That’s where we come in. Here’s how the process might look, and how we can help you.
Step 1: Let’s identify your space requirements. How much space will be needed? Where should the building or space be? When does an existing lease term expire? And when do you need it? (Here comes timing part).
Step 2: We will survey the entire market in the desired locale. TRA does this which is a huge time saver for our clients. LoopNet no longer discloses the entire market; We search CoStar, CBA, Crexi, and use our own in-depth knowledge of spaces to put together a comprehensive list.
Step 3: After client review and the decision of which locations are most attractive, a tour of the buildings or spaces is arranged. It is usually not necessary to inspect every option – many can be weeded out early on – in an effort to maximize your time and keep the process efficient.
Step 4: After the tour, a short list of the most attractive options is created. TRA sends a custom Request for Proposal to the owners/landlords or their leasing brokers which asks the questions you will need answered. This may take a few days or weeks to receive the responses. Side bar: we are often amazed on how long it can take to receive responses, which causes delays in the process.
Step 5: In the case of office space, we may need a “test fit” space plan to learn if the space can work. In industrial space we may need to do a racking plan. You will want to know if you fit in the space.
Step 6: The space or building plan will need your review and approval. Then it will need to be priced by the landlord’s construction contractor. The GC will involve his/her sub-contractors for their preliminary bids. Final or firm bids may not be available until “working” or permit drawings have been created and approved by the city planning department.
Step 7: After the costs for interior improvements or changes to the industrial space are confirmed, the negotiations of who pays for what takes place. We may be in discussions with more than one building owner (as a plan B or C ). At this point we are simple trying to secure the best economics for you.
Step 8: Once the lease economics are fully agreed to in the case of office space, final working or permit drawings are created. Time needed depends on how busy the landlord’s architect is. But it can take weeks (so the clock keeps ticking). Once those drawings are complete and you have reviewed them, approved building permits are requested from the City building department. The plans are reviewed by several city agencies including the Fire Department to ensure compliance with safety regulations. Again, time needed to obtain the permits depends on how busy the City department is. We have seen it take four to six weeks.
Step 9 (last step!): With building permits in hand, the landlord’s GC can commence construction. Depending on the complexity of the interior improvements or changes needed to the building this can take three to six months (yowza!).
To summarize: There are a lot of moving and potentially confusing events that can eat up time. If we wait until there is only five or six months remaining on the lease term, we have effectively run out of time. And your savvy building owner/landlord and his/her leasing broker knows that we are in that boat.
Engage early and keep time as your friend.