By: Brian Conroy, Senior Vice President, Jones Lang LaSalle
As a lease expiration date approaches, many mark their calendars in dread of the administrative tasks ahead. And although moving is complicated, it’s also a unique opportunity to reinvent your culture, address your space utilization and ensure your strategy is aligned with organizational objectives.
At Jones Lang LaSalle, my business partner, Scott Pick, and I follow a strategically crafted roadmap to guide our clients through the process. This is the fourth post in a blog series; each post will serve as a stop on the way to your destination – success.
Next Stop: Evaluate Options and Drive Organizational Consensus
It’s critical that all team members are involved during this stage. While conducting market tours of buildings on your shortlist, the right team will be able to pinpoint the risks or costs associated with each asset. From there, you can make eliminations and narrow your list of finalists.
Each and every detail is crucial at this stage, as it will play into the cost of the final deal. Below, I’ve outlined four steps to evaluate options, drive organizational consensus, and ultimately, select your space.
As my business partner, Scott Pick, mentioned in the previous post, keep in mind that while these steps provide a preliminary framework, the process will evolve to accommodate and serve the needs of individual business objectives.
Step 1: Develop Request for Proposals (RFPs) from Your Shortlist
Once you’ve developed your final, even shorter, shortlist, you can begin developing requests for proposals (RFPs). Each proposal is unique, based on building status and business drivers. However, RFPs present a prime opportunity to identify risks or expose areas that need attention from the landlord, prior to entering into negotiations. This is just another reason why touring with the right team, and having access to the right resources, is key while building your shortlist.
Ensure that you document the entire RFP process, from start to finish of negotiations. This will be a strong reference piece in building (and defending) your business case, and eventually, serves as a means to build organizational consensus.
At this point, we concurrently put together a fit plan, in which we ensure key business drivers and physical space objectives align with selected buildings or floor plans.
Step 2: Conduct a Technical (and Financial) Analysis of Each Property
As feedback rolls in from landlords, assess all responses and concessions as they relate to your deal drivers. Ensure that you gain a holistic understanding of the total spend, which includes rent, construction cost, free rent, building improvements, moving related expenses, signage, etc.
It’s critical that you conduct a financial and technical analysis of the buildings on your shortlist. A real estate professional will drive a financial model that reflects all details that could impact the deal—including points that the potential landlord may have overlooked, including EBITDA impact.
Step 3: Prepare a Subjective Property Comparison
Next, rate the properties on your shortlist based on business objectives. Which drivers are being met? In what ways is the landlord willing to meet company needs? Prioritize deal drivers at this stage. Properties that meet your most crucial requests will rank higher on your shortlist.
While comparing properties, we also suggest involving other team members to continue to build internal consensus. Demonstrate which properties are best aligned with company culture or values using your building ratings. In my experience, team collaboration at this stage helps others to feel more confident in the final decision. It also helps to pinpoint group deal drivers (i.e. wants vs. needs), which can drive more strategic negotiations.
Step 4: Select Your Space
Once you’ve selected and negotiated with your top choice properties, you might find that several options are a perfect fit. If this is the case, use it as leverage during negotiations. But, in most cases, the holistic process drives a single property to the top of the list, making the choice a simple one.
Next, select your space and enter into final negotiations with the landlord.
Stay tuned for the next post in the Roadmap to Success series—Negotiate Your Lease and Prepare for Occupancy—to be presented by my business partner, Scott Pick.
A real estate professional can help you align business drivers with your real estate choices. Please contact your local JLL office, broker, or myself, if you’d like assistance with your office relocation or renegotiation at email@example.com.
About the Author
As Senior Vice President in the Great Lakes Region Corporate Services Division, Brian specializes in tenant representation. He has more than ten years of experience in commercial real estate and currently represents clients in Northeast Ohio. View Brian’s full bio to read up on his experience.