Managing the lease renewal process is more than a necessary evil. It's also an opportunity for you to better tailor your company's real estate portfolio to achieve your goals. Once you've decided to renew a space, the negotiations start. Here are four strategies that can help you come out on top of the negotiation.
Continue ReadingUsing the right strategy can make a big difference in your corporate real estate optimization program. Whether you're researching, leasing or configuring space, tweaking your practices just a little bit from the traditional norms can make a big difference in your results and save you thousands (or millions!) of dollars over the long-term.
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For many tenants, a rent escalation is a yearly occurrence. They can come in two basic types -- fixed and variable -- although they can also come into play when your lease comes up for renewal. While some tenants are able to avoid them, they are usually an unavoidable cost of occupying real estate and need to be managed and planned for. Their terms can vary from lease to lease, so it's best to carefully abstract your lease so that you can predict both what will happen and when.
It's likely that real estate occupancy cost is in your company's top three expense categories along with your cost of goods sold and what you spend on labor. Given that it's a big expense, it also gives you the opportunity to make a big difference in your bottom line. Here are a few ways that you can reduce your occupancy costs:
As the field of commercial lease administration software programs continues to expand, choosing the right one for your company gets more and more challenging. There are a few features, though, that are non-negotiable. Programs that support these four crucial functions will give you the basic functionality that you need to effectively manage your real estate portfolio.
When it comes to corporate real estate optimization, it's hard to beat the returns that you can achieve by discarding a property that is no longer suitable for your company's needs. While moving to a different or smaller space might save some money, discarding an unsuitable property can not only save money but also turn an inflexible fixed asset into liquid cash. Here are four ways to tell if you have a location that is ready to be shut down or replaced.
Continue ReadingWhen it comes to administering a corporate real estate portfolio, one of the most important processes has almost nothing to do with the underlying buildings and land. Having a critical date management regime ensures that you not only meet your obligations under your leases but also that you are prepared for any changes that can occur in your occupancy status. To a large extent, leases are schedules of what you have to do and when you have to do it.
A tenant improvement project is both exciting and harrying. The most challenging part is getting the space negotiated, designed, permitted and built before you need to move out of your old space. The key to managing the process is to get an early start.
In a perfect world, your company would have at least six months to get your tenant improvement project completed. This requires looking for space at least nine months before the move date, and to start preparing before that.
From 12 months or more before your move, you should research markets and buildings. That is the best time to figure out if you want to move and where. You can research occupancy costs, compare them to what you're spending in your current space and find a tenant representative if you don't already have one.
From seven to nine months, it's time to start getting serious about finding space. When you negotiate, pay careful attention to the tenant improvement allowance. $5 of TI today is worth more than $1 of rent reduction per year on a five-year lease.
Once you go under LOI, it's time to build a team. If you don't already have professionals in place, find an architect or space planner. While some large landlords will require you to use their construction companies, it's also appropriate to start interviewing contractors so that you are ready to go. Ensure that the general contractor you choose has the necessary relationships and expertise to handle any additional advance skills that you need to include on your construction team.
No later than seven months from your move-in date, it's important to get your architect to draw up plans. In fact, he can start on the process once you're in negotiations if you're relatively sure of which space you will take. The sooner you can get plans drawn up, the sooner you can begin the process of pulling permits. If you get everything started seven months before your move date, you should be able to start demolition and construction five months prior to the move.
The construction process will largely be governed by the schedule that your contractor sets up based on the tenant improvement plans that your architect provides. As long as you do not submit changes while the project is in process, you will be able to hold the contractor to the schedule.
Done right, the schedule will have the construction substantially finished one month before your move date. This should include finishing work like painting and carpet installation as well as both low- and high-voltage wiring.
The last month lets you work on three things at once:
Carefully inspect your space to build a punch list of items that need more work. This way, you can get the tenant improvement work perfect before you move into the space, letting the construction crew do their job without having to worry about interrupting your employees.
Move in your new furniture, fixtures and equipment. As a part of this process, you will want to test your new telecommunications system and network to ensure that everything is installed properly.
Finally preparing for the move by notifying clients, filing change of address forms and putting switchover procedures in place.
With some careful timing, the move to your new space should go without a hitch.
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