When negotiating office leases, time is of the utmost importance for tenants. To properly run a thorough leasing process, you must have plenty of time to vet your options in order to make sound business decisions.
At AQUILA we help hundreds of clients every year with their office lease renewals, so we understand how important it can be to get out ahead of an upcoming lease expiration.
In this article we will explain:
- Why it’s important to allow enough time to search for office space
- When to start your search for office space
- Typical timelines for starting your space search based on your lease size
- Three factors that could impact when you start to search for space
Why is it important to plan enough time for your office space search?
You should begin the process early enough that you have enough time to:
- Identify multiple options
- Create a competitive environment by leveraging landlords against one another
- Negotiate the various deal points and legalese within the lease document
- Have plenty of time to complete construction or build-out of the space and move in
If you don’t allot enough time for each of these steps, you could lose leverage and be forced to make decisions without fully vetting each option, ultimately resulting in financial loss or business interruption.
When to Begin Looking for New Office Space
Whether you are looking for new office space, or planning to renew at your current space, a you should follow the same process on the front end.
In order to achieve the best results on a renewal, it is important to create a sense of uncertainty with your current landlord. If your landlord believes there is a chance the that you may relocate, they are typically more likely to offer more attractive deal terms.
Typical renewal/search timelines based on tenant square footage are:
|Company Size||Timeframe to Begin Process|
|> 25,000 sf||18 – 24 months prior to lease expiration|
|10,000 – 25,000 sf||12 months prior to expiration|
|< 10,000 sf||6 – 12 months prior to expiration|
While these are the typical timelines, there are a number of factors which could impact this schedule, such as:
- Market conditions
- Desire to build or move into new construction
- Condition of new space
How These Factors Impact When You Should Begin Looking for New Space
Changing market conditions can have a significant effect on when your should start searching for new office space.
For example, tenants in Austin that are around 25,000 sf or larger are encouraged to look for new office space earlier than smaller tenants due to a lack of supply. These larger tenants may be forced to consider new construction or submarkets outside of their desired area due to a lack of large blocks of space available in existing buildings.
New developments in the market can have a significant impact on the timeline to start searching for new office space.
For example, if there is a large amount of office space under construction in the market, it is important to act quickly before other tenants sign leases on the new space as the first tenants into a development typically achieve the most favorable economics. By hiring a tenant rep and visiting the site in its early stages of its development, you can usually gain leverage over those who come later in the process.
Office Build-Out Requirements
The condition of the space a you eventually lease will significantly impact the time needed for construction planning and build-out.
Since you will not know the condition of the space you will ultimately end up leasing before beginning the process, it is important to allot enough time for a potentially long construction timeline.
If there was already a tenant in the space and much of the infrastructure needed is already in place, the construction timeline will be shorter. This type of space is called second generation space. Shell space, space that is either new construction with very little infrastructure in place or a space in which the landlord has removed the majority of the necessary infrastructure after the previous tenant vacated the space, requires significant architectural and engineering work as well as permitting adding months to the construction timeline.
To learn more about build-out timelines, and how the condition of the space can impact that timeline, read our article How Long Does It Take to Build-Out or Renovate Office Space?
Now that you know the typical time before your lease expiration in which you should begin the renewal or relocation process, here are some articles that you may find useful:
- Renewing Your Commercial Lease: 3 Reasons to Renew Early (and 3 Reasons to Not)
- 3 Reasons to Use a Tenant Representation Broker for Your Lease Renewal
- 5 Crucial Steps for Finding the Perfect Office Space to Lease
To begin planning your process, download our free site selection excel timeline template.