#0086 - When To Begin The Renewal/Relocation Process

Confessions of a Recovering Landlord

When to begin renewal/relocation discussions with a client? Several factors to consider:

• Is the organization changing rapidly and not sure how much space they will need?
• Company is unsure of the right location for their client base and employees.
• There is a chance the organization will be acquired or might be acquiring themselves.
• Company is confident the economy will experience a downturn bringing lower rental rates OR an upturn bringing higher rates.
• Client has a renewal option which must be exercised by a certain date.
• Missing a renewal option date could allow the landlord to lease the space out to another tenant, forcing client to move whether they intended to or not.
• The client wants to shrink the size of their space and are willing to sign a longer term lease to accomplish that.
• Client might consider buying a building instead of leasing.
• Client is doing a 5-year or longer forecast and wants to know what to assume for future occupancy costs.
• They want to consider changing their office culture in order to attract the right employees.
• Occupancy costs are generally the second highest expense behind payroll/benefits and should be managed proactively.
• The average project from the start of the search to the signature on the lease is six months. Purchases generally take even longer.
• If the tenant decides they are better off relocating and the new location requires interior construction, that could add two to six months to the project timeline.

Why use a tenant rep broker?

• A tenant rep broker will almost always save you money (whether through face rate rental price, expenses, tenant improvements, etc).
• The rental rate already includes a fee for the tenant's agent which the landlord pays. If the tenant doesn't use an advisor, it's like paying for a service without getting the benefit.
• Using an advisor provides professional distance from the negotiation for the CEO. This allows all items to be considered collectively instead of sequentially.
• An advisor negotiates many leases a year and is an expert on industry trends, terms and practices. That knowledge is used on behalf of the tenant and levels the playing field with the landlord.
• An advisor is a fiduciary to the tenant and must put the tenant's interests above his own. Loyalty is critical.
• The advisor saves the CEO time that he would otherwise have to invest himself in dealing with every aspect of the search (if there is one) and negotiations.