Thinking About Leasing Office Space in 2015? Start Preparing Now.
Setting out to lease available space can be daunting when you start thinking about the many different steps to take, stakeholders to please, and options to examine.
The most critical step is to hire the right commercial real estate leasing agent. An experienced leasing agent will help you market your space effectively, interview and secure the best tenants, investigate competitive lease rates (with the best terms) and let you know what you can expect – and should accept.
Commercial real estate landlords and owners can get a head start on both hiring the best leasing agent and outlining the transaction and marketing plan by first answering key questions below.
What do you expect from the transaction?
Determine what your primary and secondary goals are in the business agreement. While additional revenue and shared overhead expenses are two benefits of leasing space, there are other issues to examine. Including, the type of lease agreement that will work best for your expected return – NNN Lease, Modified Gross, or Full Service Commercial Lease – should be discussed with your leasing agent early, and often. For example, it could be that you are simply looking to repurpose unused space on a temporary basis, which will be a key factor in the lease agreement. However, if you are aiming for a longer term tenancy, you must decide how much space to lease, what share of the structure’s overall expenses the tenant will pay, how a new tenant will affect your overall tenant mix and the building as a whole, and what accommodations must be made to achieve a harmonious deal.
What are you willing to offer?
To attract great tenants, in addition to the building’s basic features, you may have to sweeten the pot. Think about offering shared resources such as a receptionist, use of common areas, access to eating areas, workout facilities, and internet. These types of offerings will appeal to start-ups in particular. You may also want to consider supplying existing space furnishings or tenant improvements.
Who is your ideal tenant?
With the help of your leasing agent, compile a tenant profile of the company type and culture you think would be your best tenant. If your plan is to only lease temporarily, consider non-profit organizations who may be putting on a major event in your area. Or maybe a company that is planning to move into the area and needs a temporary setup and hiring location. If your goal is a long-term tenant, startup companies should be on your list. They often have VC money available and the energy they will bring to the space may benefit other tenants and your organization.
What does the tenant expect from your space?
This question is probably the hardest one to answer, yet the one that will make all the difference in the end. You and your leasing agent should be prepared to answer all of the prospective tenant’s questions regarding the space. Ultimately, they will be looking for the right balance of affordability and conveniences.
Chances are the following items will be on their shortlist:
The location – (and all criteria that falls under that specification) includes knowledge of public transportation availability, distance from the closest airport(s), traffic patterns, submarket reputation, crime rate, and local amenities. It’s also important to inform potential tenants about any planned expansions, not just affecting their space or overall building, but any new construction in the surrounding submarkets.
Exact space specifications – These include the layout and measurements of all office space, restrooms, windows, and common areas. Spell out the details from the beginning to avoid any future misconceptions. Inform the prospective tenant of what they can change and what they cannot, and whether there may be a possibility for them to have access to more of your building’s space if needed.
The building itself – The age (and in some cases the style) of the building will be a factor, as will the need for the space to meet current building codes and regulations. Sustainability is important to most tenants. If your building is green, many potential tenants will consider this a plus. In addition, general maintenance excellence will be expected, along with high-speed internet connection, newer, well-maintained building systems, and well-maintained grounds.
Security – All tenants will want to know what security systems and measures you have in place and of any planned security improvements.
Parking – Knowing that there is adequate parking space for the tenant’s employees and visitors will be one of the first questions your prospective tenant will ask. If you do not have parking space available you will need to provide information regarding nearby available parking lots and any costs. Any employees that may bike to work will also need to be accommodated.
Meissner Jacquet Commercial Real Estate Services is acutely aware of tenant requirements and the effect of a thriving tenant mix on the profitability of commercial space. Tim Meissner, a Principal at the firm, stresses that “engaging a knowledgeable leasing agent who will enact your business and marketing plans should be your top priority.” The bottom line is that if you are thinking of leasing space, make your plan solid and prepare early!
Meissner Jacquet Commercial Real Estate Services