Every business is unique, with unique real estate needs. Likewise, every site selection proceeds according to the distinct characteristics of the business and market in question. However, most successful site selections usually progress through 10 broad steps. Below, I outline these steps and the time they should occur.
Please note that, for the purposes of this article, I assume an office size of approximately 10,000 square feet. If the tenant is looking for fewer square feet, then less time is required for each step; if the tenant is looking for more square feet, then more time is required. The time frames also assume that the properties already exist. If a facility is to be newly constructed, please add 9 months to one year to the time range.
These time frames are ideal, but the process can be completed on a tighter schedule if necessary. I have done so many times!
For more information about site selection, please contact me at (630) 805-2463 or [email protected]. Or, click here to send me your contact information and market requirements – I’ll respond within 24 hours with available listings which fit your needs.
Month 12
Step 1. Select a tenant representation commercial real estate broker who specializes in relevant property type and market. Hiring a tenant representation broker is the first and most vital step.
Month 11
Step 2. With your tenant representation broker, develop your facility/site criteria. Based on your criteria, develop a list of properties to tour. Tour selected properties, taking detailed notes. Develop a short list of 5 or so properties based on tour results, preliminary financial information provided by broker.
Month 10
Step 3. Using financial analysis is key to truly understanding the deal and how the various buildings compare. Be sure to narrow down your alternatives to 2 or 3 options to pursue.
Month 9
Step 4. Begin the space planning process.
Month 8
Step 5. Submit a Request for Proposal (RFP) to the final 2 or 3 alternatives, creating a competitive bidding environment. Submit an RFP to the current landlord, if a lease renewal is a possibility.
Month 7
Step 6. Receive and evaluate initial proposals from landlords. Update financial analysis with new data. Re-tour if necessary. Reconsider priorities.
Month 6
Step 7. Empower your tenant representation broker to negotiate on your behalf and to create a competitive bidding environment. Use market research to formulateyour negotiation. Enter the negotiation with clear objectives and uncover the landlord’s hidden agenda
Month 5
Step 8. Once both parties reach a general consensus on economic terms, sign a nonbinding Letter of Intent (LOI) to document the agreement.
Month 4
Step 9.Receive the lease and check it for accuracy. Retain an attorney who specializes in commercial real estate to negotiate the contract.
Month 3
Step 10. Begin construction on space as soon as lease has been signed and final space plan approved. Choose a move coordinator, hire your moving company and plan your move.
Feel free to contact me for additional information at [email protected] or (630) 805-2463.
This article was originally published by Troy Golden in the Oak Brook Office Report.
Good timeline Troy and important for people to see the reality of how many months or years, these processes can take! Reality needs to be exposed so people start early! Thanks.
Good Timeline. Its important that tenants are aware of the notice provisions in their leases as it pertains to renewal negotiations and terminations. Also, in some markets the construction period needs to be lengthened as we’ve seen 6+/- months from permits to occupancy in some municipalities. Its easier to slow down a process than to speed it up with so much in the control of third parties. Tenants need to revisit their real estate requirements annually as part of their company budget review, even if its an acknowledgement that they are “OK” for the next 2 yrs. This review should also include a check on market conditions. That is where it is important for tenants to keep in touch with their CRE representative. And I mean the tenant’s broker, not the landlord’s broker. Their broker can give them some insight as to current and anticipated market conditions. i.e. an anticipated influx of vacancies might create an environment for a firm to relocate to better space which might require a short term extension, waiting for those prime market conditions. Thanks for your valued contributions to our industry blog.
Thanks Lynn, we appreciate all of your contributions and feedback to this blog! Excellent points here. Sounds like you should be blogging too! We would welcome that!!