A team approach to expediting tenant alterations

As published in the Westchester County Business Journal

- By Alan Peterson

June 20, 2011. If there’s any overarching business maxim in the 21st century, it’s that the most nimble companies will survive. In commercial real estate, that translates to the capability of expediting tenant alterations because for many companies new office space seldom allows for immediate occupancy; in fact, it’s often either just raw space in need of a complete build-out, or even more time consuming, space that needs demolition and then new construction.

In addition to fundamental considerations such as flexibility and business continuity, other factors can come into play to speed of office relocations or renewals. Negotiations with the landlord can be facilitated if the tenant can start the lease term sooner. This critical bargaining chip becomes especially powerful if the new space is unoccupied because the landlord wants to restore its productivity as quickly as possible.  

Evaluating critical elements

The quickest, best-value, highest-quality results will be obtained via a direct contract between a decisive member of senior management and a principal of each supporting “service” (such as broker, architect, attorney, construction firm) where each provider is an independent specialist tailored for the particular requirement.

The question then becomes: How does my company evaluate commercial real estate teams to determine whether they possess the critical elements necessary to deliver everything from a comprehensive “one-stop shopping” package of services via a single point of contact to the most expeditious timeline of performance possible, all at a competitive price? Assuming your team will require the services of a broker, architect, attorney, construction company and possibly a project management firm, the interactions among them can prove critical to ensuring a smooth transition.

Of course, experience in working together and in the local market goes a long way to establishing the well-oiled operating machine you will need. Generally, the best teams will exhibit a strong cross-knowledge of each others’ issues and a high level of mutual accountability.

The team will also understand the need to balance cost, quality and speed in any build-out. And their interactions with each other will generally predominate at the principal level. Dealing with company representatives without the authority to make instant, intuitive decisions can drag out tenant alterations by weeks.   

Ensure your team has direct access to your decision maker and your new landlord, as frequently as needed. Performance in the face of inevitable surprises depends on the ability to react promptly.

Structure and flexibility

While an efficient team needs both structure and flexibility, the organization of it will depend on the tenant’s company and the specific nature of the build-out required.

The lead player, while often the commercial real estate broker, can be the architect or any of a number of people responsible for executing the alterations. The tenant may wish to avoid having a point person since that provides an extra layer of bureaucracy for all tasks to pass through. In addition, sometimes the nature of the alterations will morph during the build-out and you may need to bring in another participant with expertise in a new, unforeseen area. Usually the team member with the most connections will determine this, but if tenants wish to remain hands-on throughout the alteration period, the decision may originate from their company.

For all these reasons, the structure of the alterations team will vary based on the assignment, but it’s important for the members to possess some knowledge of each others’ skills because an overlap between their various functions often occurs. In order to determine whether a new specialist is needed, you must know enough about their area of expertise to know when they are required.

Expediting tenant alterations relies on three basic components: the active participation of senior management, their cross-knowledge of each others’ fields and the flexibility to adapt to unique situations as the project progresses.

Reprinted with permission of Westfair Communications