This sense of culture manifests in the physical world, too. Almost everything — from what neighborhood a company ends up in, to what type of furniture they select — is dependent on the character the company embodies—or aims to embody.
Often, the key to brokering a successful deal is knowing your customer. That means familiarizing yourself with the decision-makers, the company’s culture, product, and long-term vision. If you curtail your showings to fit their aims, and present yourself as someone who “gets it,” you stand a solid chance of closing the deal. You won’t just be a space shower, but instead someone who gives a company a brick-and-mortar body, a vital part of its identity.
Preparing yourself is actually easier than it might seem. In fact, I’ve whittled down four of the most common scenarios a broker will face. The main difference in these scenarios is a single factor: experience.
The four main company categories are:
- An experienced company with an experienced prospector
- An experienced company with an inexperienced prospector
- An inexperienced company with an experienced prospector
- An inexperienced company with an inexperienced prospector
Here’s a breakdown of each factor:
Companies looking to find their first lease are typically looking to minimize their risk and exposure as much as possible. Most likely, they are emerging from some sort of co-working environment, have received recent funding, and are almost always experiencing regular changes in personnel.
More often than not, these types of companies will be looking for a short-term deal—preferably in a space that’s both wired and furnished. Short-term typically means a sublease, or a building with non-institutional ownership, and a space that may be traditionally less desirable but fits the needs of the tenant. A wired space means a sublease as well, or if you’re lucky in a space with existing wiring that is compatible for what your tenant needs. A furnished space means a sublease or a space with an existing tenant on their way out and looking to get rid of their existing furniture.
A company looking to sign their second, third, or even fourth lease has a different set of expectations. They don’t necessarily need a short-term deal, which opens up your options in terms of the types of buildings and spaces you can show. Institutional ownerships are now in the mix and may even be preferable due to their stability and security.
For these sorts of deals, the spaces don’t necessarily need to be wired or furnished either (although it never hurts). These companies usually have a lease expiring on a specific date, as opposed to first timers who may be in a month-to-month situation with more flexibility and therefore less ‘pain’. On the other hand, this also means that there is a possibility that they can renew with their current landlord, either in their existing space or within the building or ownerships portfolio.
Keep this in mind: whoever is running point on a leasing transaction is most likely going to be someone of operational significance within the firm. They might be difficult, but in all likelihood they are competent (or else they wouldn’t be in their position). Just because a customer treats you like a glorified apartment broker, doesn’t mean you should treat them like a residential client.
You’re going to need to explain the basics to a prospect going through the office leasing process for the first time.
For example, on short-term deals in particular, it’s important to explain how real estate taxes work (this will probably be news to them). It’s almost as important to explain how pushing a base year as far ahead as possible can be the difference in paying one real estate tax bill instead of two. Additionally, you need to explain annual escalations and Good Guy Guarantees, so make sure you’ve rehearsed those spiels and are confident delivering them.
Once you’ve gotten past basic term sheet terminology, you’ll also need to prepare your customer for upfront costs and hold ups once a space is secured—including, but not limited to, connectivity installations/modifications, furniture purchases/rentals/deliveries, and an estimated timetable for any work that still needs to be done to the space. If you don’t address these logistical issues before they arise, your customer may feel unprepared and caught off guard. It’s your job to prepare them. While not doing so may not cost you that specific deal, it may lose you a referral down the line.
When you’re dealing with someone who has worked on a transaction in the past, you’ll be helping them tackle different issues.
Instead of explaining basic terminology, deal structure, etc., you’ll be putting their minds at ease, addressing all the problems they’ve experienced in the past. For example, a company that has previously been in a building where there has been a mandatory fire system upgrade may have been required by the landlord to pay for the installation themselves. Chances are, they’re going to try to ensure that responsibility falls to the landlord their second time around. Or, for a company that has had an A/C unit burn out before the lease has expired, they may look for stronger language in the lease with respect to maintenance, or a generally larger commitment from the landlord. Lastly, a company that has been forced to sublease their space for whatever reason (they outgrow the space, downsize, get absorbed, etc.) may look for more flexible terms and a quicker turn-around time for owner consent.
Mixing and matching experience
Keep in mind that just because a company is established does not mean that your point person on the transaction is experienced. Similarly, just because a company is in its early stages doesn’t mean that your point person is inexperienced (and vice versa). In the tech world, the turn-over rate is high, and this ultimately changes the dynamics of a deal.
However, once you assess the dynamic you have on your hands, you’ll be well-equipped to turn a showing into a signed lease.