When to begin renewal/relocation discussions with a client? Several factors to consider:
- Is the organization changing rapidly and not sure how much space they will need?
- Company is unsure of the right location for their client base and employees.
- There is a chance the organization will be acquired or might be acquiring themselves.
- Company is confident the economy will experience a downturn bringing lower rental rates OR an upturn bringing higher rates.
- Client has a renewal option which must be exercised by a certain date.
- Missing a renewal option date could allow the landlord to lease the space out to another tenant, forcing client to move whether they intended to or not.
- The client wants to shrink the size of their space and are willing to sign a longer term lease to accomplish that.
- Client might consider buying a building instead of leasing.
- Client is doing a 5-year or longer forecast and wants to know what to assume for future occupancy costs.
- They want to consider changing their office culture in order to attract the right employees.
- Occupancy costs are generally the second highest expense behind payroll/benefits and should be managed proactively.
- The average project from the start of the search to the signature on the lease is six months. Purchases generally take even longer.
- If the tenant decides they are better off relocating and the new location requires interior construction, that could add two to six months to the project timeline.
Why use a tenant rep broker?
- A tenant rep broker will almost always save you money (whether through face rate rental price, expenses, tenant improvements, etc).
- The rental rate already includes a fee for the tenant's agent which the landlord pays. If the tenant doesn't use an advisor, it's like paying for a service without getting the benefit.
- Using an advisor provides professional distance from the negotiation for the CEO. This allows all items to be considered collectively instead of sequentially.
- An advisor negotiates many leases a year and is an expert on industry trends, terms and practices. That knowledge is used on behalf of the tenant and levels the playing field with the landlord.
- An advisor is a fiduciary to the tenant and must put the tenant's interests above his own. Loyalty is critical.
- The advisor saves the CEO time that he would otherwise have to invest himself in dealing with every aspect of the search (if there is one) and negotiations.
