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Few occasions offer greater financial opportunities for a company than its lease renewal or relocation. Yet many tenants fail to understand the correct timing needed for proper positioning and negotiations. We say it again... real estate is a process not an event.
By starting too early, you compromise your position by shielding your landlord from competition with others because of a lease start date too far in the future. By starting too late, you may restrict another landlord's ability to modify alternative spaces in time to best suit your needs.
At the very least, you should convey the appearance of a process and timing to keep all options open. Since deliberations may become long and difficult, a general timeline will also help you proceed in an organized and efficient manner.
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Opinions vary widely regarding "needed" space. President Obama has 816 square feet in the Oval Office, plus a study down the hall. Prisoners in Alcatraz were confined to 45 square feet, and that included a bed, table, sink and toilet. Space density for office tenants averages between three-to-four employees per 1,000 rentable square feet. Executive areas are less densely populated, and contact centers more so.
Too often, we observe tenants who believe they got a "great deal" only to find out it was a sub-optimal office layout as their business evolved. While a rental rate may reflect a superb market value, wasted space is wasted money. An extra 1,000 square feet at the "aggressive rental rate" of $40 per square foot translates to losing $40,000 per year.
We always encourage our clients to evaluate the space first and rent second. Even when you initially chose a space that's just right, changes in your company size, budget and corporate culture may eventually make it obsolete.
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Choyce Peterson
