Finding and leasing office space can be a long and complicated process. Where do you start? And what are all the steps? It can be difficult to know where to begin.
At AQUILA, our tenant representation brokers help businesses like yours locate, negotiate and lease office space every day. Our brokers use a thorough and proprietary process for finding, negotiating and leasing space, but there are some general steps that every tenant rep broker will follow.
In this article, we’ll walk you through this process from Discovery to Delivery.
The site selection process should always begin with Discovery. Taking the time to understand exactly what your company needs is critical to getting the rest of the process right.
For some brokers, the Discovery phase will simply be a quick conversation or even filling out a basic form. At AQUILA, we take it a bit more seriously. After all, thinking critically about and fine tuning your real estate requirements on the front end will save you time and money down the road.
During this phase, we will get to know your brand, company culture, location preferences, growth plans and budget so that we can help you make informed real estate decisions that fit with your company’s strategy.
We break down the Discovery process into two phases: Needs Assessment and Timeline Creation.
During the needs assessment phase, your broker will work with you to understand your firm’s long and short term needs and goals.
Some questions they may ask are:
- Is your company growing quickly?
- Do you prefer a dense, open layout or a more traditional, private-office configuration?
- How quickly do you need the space?
- What are your parking needs?
- Do your employees need to have easy access to amenities within the property or nearby?
Through dialogue with you, your broker will flesh out what is most important in your company’s search for the best real estate alternative.
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Assess Your Needs from All Angles
A skilled broker will also provide concrete tools to help you make informed decisions about your needs. If your broker doesn’t offer these tools, ask for them!
Some of the things AQUILA provides our clients during the needs assessment phase that you may want to ask your broker for include:
Next, your broker will analyze the information gathered in the needs assessment and produce a realistic timeline for your project. They will look at your goals and challenges and design a holistic process, while allocating adequate time to achieve the best possible results and setting solid goal dates for each step of the process.
Creating a timeline provides both the broker and the client an ongoing guideline to manage the process and helps set expectations at the forefront of the process.
Once your strategy is set, your broker will facilitate the search for a site based on your custom requirements to identify the best options for your needs.
A professional tenant representation broker will do the heavy lifting on the search, preparing surveys and scheduling tours.
The search phase generally begins with a market survey. Your broker will perform market research to identify the best available options in the market based on your predefined parameters. They should compile property flyers and floorplans for each option and present these to you for review. Based on your feedback, they will then create a shortlist of your top options.
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Ensuring a Comprehensive Search
The market survey is a very important step in the process because you want to make sure that your broker is showing you all of your available options.
Some measures that AQUILA brokers take include:
When hiring a tenant representation broker, be sure to ask the right questions so that you get a broker that has access to the resources needed to conduct a thorough search. You want to choose a broker that leaves no stone unturned.
Once you have created a shortlist of properties you’re interested in, your broker will schedule and facilitate tours of each property. This is your opportunity to go see the space and building in person, experience the amenities and get a feel for what it would be like to occupy space there.
Request for Proposal
After the touring stage, you will generally have narrowed your focus to just a few options. Once you have selected a short list of properties, your broker will request proposals from each landlord, then provide these to you for review.
After proposals are received, most brokers will simply share those with their clients, leaving you to figure out the differences between each proposal.
Experienced tenant rep brokers will not just send you the proposal but provide a detailed comparison and analysis of each offer. By providing analysis your broker will better equip you to make the best decision for your company.
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Analyze your All-In Costs
When analyzing proposals, be sure that you consider not just what the proposed rent is, but your “all-in” occupancy cost, including monthly parking costs, anticipated build-out costs, moving and cabling costs, etc.
An experienced tenant rep broker will do these calculations for you.
When trying to identify the best space for your company it is important to evaluate the efficiency of each space and how much it’s going to cost to build-out the space so that it properly meets your needs.
Typically, landlords will pay for their architect to layout your desired program onto a floorplan and also get a pricing estimate on your behalf.
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Use Your Own Architect
Having the landlord and landlord’s architect perform the construction due diligence can oftentimes be sufficient; however, it is not always the best route to take since they work for the landlord, not you.
At AQUILA, we, along with our in-house project management team, can help you interview and select your own architect. In most cases, the landlord will still cover the cost of having your architect lay out the space for you.
Taking the step to lay out your space and get pricing will allow you to get a full picture of the cost to build out the space and help you during the negotiation phase in assessing proposed tenant improvement allowances.
A good broker will help you negotiate your deal from initial proposals to an executed lease. They will facilitate communication between your company, lawyers and the landlord throughout the process, working to keep you involved, making sure you end up with a space and terms that best meets your needs.
The negotiation sequence typically begins with a counter proposal.
Once you’ve received initial proposals and construction estimates negotiations begin. Your broker should draft counter proposals for each option that still meets your needs in hopes of improving the economics and other deal terms for you.
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Use Market Data as Ammo in Negotiations
Most brokers will generally just offer a counter proposal saying, “We think the rate should be $X/SF lower.”
At AQUILA, our tenant representation brokers back counter proposals up with market data. We reference our comprehensive market comps to show you not only where the market is (and try to beat it for you), but also to make our case to the landlord. This information gives you confidence that you are not getting taken advantage of, even in a competitive market.
Letter of Intent
After primary negotiations with landlords, your broker will prepare a letter of intent (LOI) which outlines the commercial terms under which you are willing to enter into lease negotiations.
A LOI outlines the key terms and conditions of the lease to be drafted, and serves as a good faith agreement between the tenant and the landlord.
Lease Document Review
Based on the LOI, the landlord will then draft a lease. You, your lawyer and your broker will perform a comprehensive review of the commercial terms to verify their accurate compliance with the letter of intent and negotiate any final terms.
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Make sure your broker is capable of providing presentation-ready reports about the negotiations and lease. Having professional looking reports can help you when communicating with and getting approval from your Board of Directors, or other stakeholders who have not been involved in the day-to-day process of securing space.
5. Build-Out and Delivery
Once your lease is signed, or sooner, you may choose to work with a project manager to help facilitate the build-out of your space. The process ends with you moving in and occupying your space.
Just because your lease is signed doesn’t mean your broker’s job is over. Your broker should work with you to make sure you have a strong understanding of your lease and stay in touch to periodically monitor and reassess your real estate needs and strategies. They should also check in prior to any expansion deadlines that you may have negotiated into your lease, as well as prior to your renewal option or expiration date.
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Request a Lease Abstract
Once the lease is signed, request that your tenant representation broker to abstract your lease. A lease abstract summarizes key information from your lengthy lease document.
At AQUILA, we do this for every client. Having this document will allow you to easily reference the major deal points quickly without having to read through the long lease document.
As you can see, this is not a simple process. Executing this process with enough time can ensure that you are in the strongest position to negotiate.
Also, there are many benefits to hiring a skilled tenant representation broker to facilitate this process and take the leg work off your plate.
You can Start Your Search for Austin Office Space in One Easy Step by utilizing our handy Office Space Calculator. Or schedule a consultation with one of our seasoned Tenant Representation brokers to get the site selection started today.