Industry jargon. Commercial real estate is chock-full of it. Whether you have negotiated a commercial lease before or it’s your first time, chances are you will run into some potentially... Read More
Updated May, 2018
The process of looking for new office space can be equal parts exciting and frustrating, and often takes more time than you think. Common reasons that businesses look for new office space include approaching the end of their office space lease, the team outgrowing the size of the current space or other changes within the company that require a change of space.
Whatever your reason for looking, there are a few important things to know that will take pressure off the transition, prepare you if bumps occur in the process, and hopefully allow you to embrace all the exciting possibilities of entering a new office space.
What You Need to Know
Most importantly, keep in mind that finding and securing new office space takes time. The average office space moving timeline spans between two and eight months, depending on the fit-out, complexity of the lease, and additional specifications. Many factors can come into play that might extend the search process, and even more can occur during the final build-out phase.
Here are a few factors that may impact the length of your search process in the beginning:
- The CRE market is thriving and office space in the neighborhoods you’re considering is in high demand, so you may have more competitors for fewer options.
- You’re looking for office space that’s a particular, perhaps hard-to-find size.
- Your search timeline may not entirely match up with the occupancy and vacancy rates of the buildings you’re considering.
The universal consensus is that the worst thing you can do is not start looking for new office space soon enough. It’s a simple equation, really: the sooner you start looking, the more time you’ll have to find the best office space for your needs.
Be sure to budget more time than you think you’ll need. Six months before your current lease ends is a safe estimate, but at any point, no matter how close the parties are to forging an agreement, a deal can fall through, and you’ll want to be prepared.
For example, while Meagan Cignoli, the Creative Director of Visual Country, may have found office space in perfect alignment with the company’s vision and needs, it wasn’t the first space they seriously considered. When we asked what advice she’d offer to a company starting their search, she said, “Start early, because our first deal fell through after 4 months [when] they decided to sell the building and not rent any more spaces. The second fell through as well. So all in all it took us 1 year to move when we were actually hoping to move within 3 months!”
Don’t Go At it Alone
One simple way to save time? Include the right people in your search for new office space. At different points of the process, you’ll want to hire:
- A tenant broker to help find your ideal space;
- An attorney to review and negotiate the lease;
- And, depending on just how much renovation and build-out you’re expecting, an architect to develop a test fit.
Even communicating openly with the rest of your team and making sure you get board approval or executive consent can smooth out the process and diminish possible complications down the line. Involving your employees in the office space search can help bring clarity to your office space wish-list and contribute to future employee happiness in the new space.
Now that you’re prepared with the basic information, let’s go over the four major steps of the leasing process in detail.
Step 1: Determine Your Office Space Needs
This step might seem obvious, but it’s easy to overlook, procrastinate, or just not put in the work needed to give you a solid foundation moving forward.
You should expect to dedicate at least one week — if not two — to get the essential details in order. This is the ideal time to strategize for the future of your business and ask questions not only about the basic needs your new office space will need to fulfill but also about how you can improve on things that might be lacking in your current office space.
Before you start looking at office space, this step will help you get a sense of what kind of office space will best serve your company over the next few years. Could your creative company, now working in a traditional office space, benefit from switching to an open office space? Is Class A property within your budget, but you don’t need all the plush amenities and prefer to save some money on Class B or Class C office space instead? Would another neighborhood serve your customers and employees better, or are you satisfied with your current location?
These are all important questions to ask but don’t forget to spend time calculating what size office space you’ll need as well. Knowing the square footage of office space you need can also give you a sense of how long the rest of the process will take. It’s a good bet to allow at least six months if you’re looking for less than 10,000 square feet of office space, whereas a larger office space often deserves a 12-month estimate.
Step 2: Hire the People Who Will Help You
This step is often lumped in with planning, but these decisions deserve their own time and attention. You won’t need an architect just yet, but you will need a commercial tenant broker. Lucky for you, there’s no out-of-pocket fee for the tenant and the landlord of your future office space pays the broker’s commission.
You’ll also want to have options for commercial real estate attorneys you want to work with in mind so that when lease negotiations come up, you’re not scrambling to get a professional legal review. Gathering the people who will help you shouldn’t take more than a couple of weeks.
Step 3: Property Search and Selection
Now that you have a clear sense of your needs and have communicated them to your broker, it’s time to get out there and start looking! It’s to your advantage to look at more options than you think are necessary. Investing more time in the searching phase pays off: you’ll get a better sense of the market and gain leverage for negotiations, which will save you time when you enter lease discussions with the landlord.
By now, you’ve spent anywhere from a couple of weeks to a few months looking at office space. Once you’ve narrowed your options down to your top choices (remember, you always want to have a back-up just in case your first choice falls through), you’ll start the final selection process.
Here’s where the critical paperwork comes in and you’ll want to use an attorney. First, you’ll submit a Letter of Intent, or LOI, before reviewing and negotiating the lease. Don’t rush the negotiating process. Instead, take the time to negotiate for precisely what you want — or as close to it as possible. After you’ve signed the lease, it will be much more complicated to ask for changes! This stage often takes somewhere between one to three months.
Step 4: Build-Out
The ink has dried on the lease, but there’s still one more step to complete before it’s time to move in: the build-out. Depending on how much work needs to be done to fit the space to your company’s needs, the office build-out is sometimes the longest of all four steps and can take three to six months.
An essential part of this step is having an architect draft a test fit, also known as a fit plan, to confirm that the new office space will accommodate your company’s needs, ranging from how many desks to the size and number of meeting rooms you need. Many choose to utilize software like Evara VR and Protofit, or even free online layout tools, to develop a test fit instead of working with an architect.
If needed, you’ll apply for a building permit before beginning construction. During construction, it’s ideal to start coordinating the move-in a couple of months in advance or up to six months if you have a large company and/or a lot of construction.
When leasing new office space, don’t be afraid of stressing the details — there’s no such thing as being “too thorough” in any of these major steps. If you’re looking for more information, read through these frequently asked questions and then reach out with questions or additional details about your search and how we can help.