The leasing process is complex and time consuming when done properly. Tenants can lease space from landlords from a position of strength, or conversely, a position of weakness. When engaged, professional Tenant Representatives leverage a comprehensive understanding of the market and the dynamics involved to establish the very best terms and conditions for the tenant-client. Outlined below is a framework of the leasing process and also important considerations from beginning to end.
I. Space Needs Analysis
A. Square Feet: Estimate usable square feet based on number of employees, configuration and design, planned growth, walking corridors, special functions, etc. (Larger, well established firms are better able to forecast space needs whereas new, start-up businesses must beware of taking too much space too soon.)
B. Rental Budget: Objectives and restrictions.
C. Geographic Boundaries: Multiple locations or consolidation? (For most companies, your clients care more about your product than your location. If you can avoid commuting, you can invest more time with your family and/or running your business.)
D. Amenities: Parking, transportation, cafe, security measures, banking, community conference room(s), fitness center, walking trails, retail, auto detailing, etc.
E. Voice and Data: Redundancy, fiber optics, cable, generator availability.
F. Security: Staffed guards, cameras, driving patrol, lighting.
G. Image: Quality of finishes, views, prestige, signage capabilities.
H. Likes and dislikes in reference to current building.
I. Likes and dislikes in reference to buildings in target area.
J. Anticipation of future needs to expand, contract or reconfigure.
K. Understanding of current problems, concerns & objectives.
A. Review and consider information from updated subscription-based websites, emailed promotional material, Subleases (discounted opportunities), renewal in existing building, etc. We also email & call the brokerage community for relevant buildings and ask not only what is available, but what is rolling soon, if any tenants are marginal or in default, if smaller contiguous spaces can be combined, and if larger spaces can be demised. It is a very comprehensive approach. We do our very best to leave no worthy stone unturned.
B. Create a spreadsheet featuring all options, including their most important features and calculated cost information – as well as a full-color report featuring property exteriors and their placement on a corresponding map.
Visit selected properties and gain better understanding of each physical property, location, and amenities.
IV. Requests for Proposal
A. Create and issue customized RFPs to short listed buildings’ agents and owners (Always negotiate at least two options – optimally three.)
B. Each customized RFP carefully outlines the tenant’s required terms from the various landlords and will ultimately lead to securing the most favorable location at the best possible terms and conditions. This process creates a competitive bidding environment. As such, landlords no longer perceive the tenant as a ‘captive audience’ – it is the landlord that becomes captive.
C. Proper preparation of terms – We do our best to propose the right balance to achieve the best results. In other words, our proposed terms are aggressive enough that we don’t leave any potential concessions on the proverbial table while realistic enough that the landlord doesn’t shred the proposal for the space that our client wants. It is an art, and each transaction is customized according to its unique circumstances.
V. Comparative Analysis
A. Design a comprehensive financial analysis of short listed options.
B. Compare contenders quantitatively and qualitatively.
C. Determine client’s priorities and advise accordingly.
D. Misc. Considerations – Does the CAM seem accurate and fair? How is the management style? Do the Landlord and Property Manager appear to be flexible, fair, and responsive to their tenants’ needs?
VI. Negotiating the Transaction
A. Negotiate more than one property, and create a competitive bidding environment.
B. Continue balanced bargaining – Don’t risk losing credibility or the space that the client wants to lease and not lose.
C. Demonstrate knowledge and empathy with regard to the significant issues faced by the opposing party.
VII. Document Review
A. Mark-up lease and draft comments/recommended changes to send back to the landlord for lease revision (Broker comments complement legal review).
B. The devil is in the details. Many tenants simply accept the landlord’s lease language and then profoundly regret this passive behavior later. If the tenant has never experienced a casualty such as a fire or flood, then the casualty provisions would likely be glossed over and not revised; however, in the event of a casualty, this little provision could massively adversely impact the operations of an organization – financially and logistically.
VIII. Monitor Deal Conclusion
A. Ensure that the final lease reflects the negotiated changes.
B. Monitor landlord’s compliance with build-out and space improvements according to the plans and specifications within the allocated time frame through occupancy.