The earlier the company gets started, the better the chance to drive deal economics through competition. Getting an early start on leasing can make all the difference between finding the perfect space or settling for something less. The world of today is indeed hybrid, one that many businesses are grappling with and considering changes in the office space to better improve productivity, increasing collaboration, and supporting the retention of its employees. Time will remain as one of the most vital leverage pieces a tenant can have.
When to Begin the Real Estate Process
WRA recommends that standard tenants begin planning 12 to 18 months before lease expiration. Larger requirements or specialized needs call for an 18-to-24-month start. Our minimum recommended planning lead time is 12 months. Identify renewal-option, termination, expansion, and other notice deadlines in your lease, then build a schedule for evaluating alternatives and delivering the space your business needs. A lease-specific deadline may require you to act earlier. These are planning guidelines, not a universal legal notice period. If your lease expires in less than 12 months, act promptly and review your remaining options with your broker and attorney.
Due Diligence
Define Requirements & Timeline: It's crucial to define specific requirements, including company culture, timeline, location preferences, specialized needs, space programs, and budget. Developing a clear timeline of key dates keeps clients informed of critical milestones.
Market Research & Shortlist
Market Research: Sufficient time for market research allows for identifying upcoming availabilities and off-market opportunities. Understanding current market trends is essential for negotiating from a position of strength.
Shortlist of Desired Properties: We provide a comprehensive overview of all available options that fall within the specific clients’ criteria. We review all options with our clients and select the best properties to tour.
Evaluation of Options & RFPs
After touring, it's time to dive deeper into each option including evaluating any structural and/or cosmetic changes to each. It's not going to be perfect, and all sides expect change to the building specs before getting to a potential lease draft. We'll submit to RFPs to the top choices, ideally anywhere from 2-4 options.
Compare proposals using the same scope and assumptions. Review base rent, concessions, tenant improvement funding, operating expenses, delivery responsibilities, and total occupancy costs before deciding which option offers the best value.
Counter Proposals & Build-Out Specifications
Negotiating counter proposals can be time-consuming but is essential for reaching favorable terms. Also, finalizing build-out specifications, including the design and finishes of the space to ensure they align with the company's vision.
Defining Build Out Specs:
Before signing an LOI, another critical item that needs agreement is not just the structural design of the space but also the finishes. Each building varies with a standard finish, but it's important to ensure those finishes align with the company's desired design. The nicer the building, the higher-end building standard finishes you can expect.
LOI & Lease Drafting
In WRA’s usual process, brokers negotiate an expressly nonbinding LOI that records the agreed business terms. It becomes the high-level roadmap and economic blueprint for the attorneys drafting the lease. Check the actual nonbinding language and whether any provisions are expressly binding. If the legal effect is unclear, seek counsel before signing.
Finalize & Execute the Lease
Build a project-specific schedule with the broker, attorneys, landlord, architect, contractor, and relevant specialists. Work backward from the required occupancy date through design, approvals, permitting, equipment procurement, construction, inspections, and early access. Confirm responsibilities, dependencies, contingency, and the consequences of delays in the lease and work letter. Obtain project-specific guidance from the municipality and project team rather than assuming a standard permit or construction duration.
Build-Out & Early Access
The lease and work letter should identify who manages design, permitting, construction, and delivery. Coordinate early access for furniture, technology, and equipment installation with the project team and the required approvals.
Early Access & Lease Commencement:
Early access is not just a logistical advantage; it's a strategic necessity for ensuring your operations can begin seamlessly from day one in your new location.
By initiating the leasing process early there, tenants can negotiate from a position of strength, customize the space to match up with the requirement, and avoid the pitfalls of rushed decisions. This approach also boosts the likelihood of finding the perfect space. By understanding the importance of timing and leveraging it effectively, tenants can secure spaces that not only meet their current requirements but also offer flexibility for future growth. In the world of commercial leasing, time is more than just money—it's your best leverage.
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