There are countless variables in commercial real estate to consider. Here are the five things that the business decision maker needs to analyze when thinking about a new lease.
Your Company’s Employees
Attracting and keeping your talent are two of the most important aspects of a company. Employees are your most crucial asset. Office space can improve an employee’s productivity, but it can also hinder it. Companies need to realize the bottom line when it comes to moving into new space, and how it affects recruiting and retention. Consider your employees’ commute and parking before looking at relocating to a different area. You should know where your employees live and exactly how they get to work.
Ask how their office interactions work, where their favorite common areas are, if they like the conference rooms and how productive they are in their own working space. A prepared and experienced broker will strategically analyze this through interviews, data and technology. Employees are the most productive when workspaces are specifically tailored for them to complete their tasks. Consider open floor spaces that allow maximum flexibility. Most importantly, think of how a new office will impact your culture and brand.
The Surrounding Neighborhood and Its Amenities
High-morale employees tend to work in areas that provide great work and life balance. Don’t just evaluate the building and office space. Look at the surrounding restaurants, shops and area, the same way you look at the office space. Consider the age group that frequents the surrounding businesses and weigh that against your employee base. Renting in the suburbs versus downtown usually depends on your employees’ ages and willingness for a longer commute. Younger staffs may enjoy working from congested downtown areas for the surrounding amenities more than veteran employees.
Commuting and Access To Public Transit
How many of your employees walk, use public transit, ride their bike or drive? Know this down to exact detail when looking for new space. If you pick a location that doesn’t match your employee’s needs, they will look for other jobs. Consider where buses, subways or metros are in relation to properties you are considering, if your office uses those. If not, don’t worry about it. Worry about the commute and traffic in prospective areas, compared to where you currently are.
The usual cost to make an office workspace ready is around a year’s rent. This is one of the biggest problems we see when tenants focus on their rent rate, while neglecting to consider the leasehold improvements and the fit-outs. Prospective tenants should look at opportunities to reduce these costs and get the best use out of their landlord’s budget. In some cases, you can negotiate your lease to use any leftover lease improvement money on future rent. Consider if a former tenant’s investments can be used. An experienced broker will aid you in this.
Business leaders can’t always be correct in predicting the future. Most commercial real estate leases are five years or longer. Adding flexibility into your lease has great importance. You may find yourself needing to expand or downsize. Most leases have out clauses (right to terminate). You can also set your lease up to be flexible in subleasing, giving you the opportunity to rent out space if you are forced to move. Negotiating for a shorter lease is also somewhat common. More and more tenants are looking for one to three-year leases. Large developers with multiple office spaces are usually flexible, often allowing expansion or downsizing if you stay in one of their buildings.
As tenant-only advisors are a free resource, be sure to seek an established and experienced team to guide you through this extensive process. If you would like to talk about your options and future plans, please feel free to reach out to Steve Coughlin at (407) 599-7100.