Whether you’re facing a much-needed expansion or simply searching for your first permanent office space, tenants would be better equipped with a list of detailed questions for each space rather than going in blind. Furthermore, knowing a few important tips about the commercial real estate world will help you gain a better understanding before your broker sets up tours on your behalf.
Once your commercial real estate agent concludes their market evaluation of potential spaces, the next step is to schedule walkthroughs and tours with the landlord’s representative.
Before Your Tour
Consider the Market – Your broker will provide a detailed list of appropriate properties that could be adapted to your needs and situated within your budget range. If your industry demands high-visibility or relies on foot traffic, your city’s commercial district is likely your best option – but likely the most expensive due to high demand. However, those in professional services, manufacturing, or logistics could find more reasonable terms further outside the central business corridor. Be sure to detail any flexibilities in location to your broker at the beginning of your search.
Limit Your Tours – Because it takes quite a bit of time to fully inspect and consider each property, it’s best to limit the amount of tours per day to 4-5. You’ll also want to spend some time with your broker after each tour to regroup and analyze each space. It may also be helpful to take notes on each potential office space after each tour so your thoughts will stay fresh when it comes time to choose.
Investigate Each Building’s Directory – It’s always wise to look at a potential space’s other occupants to see whether or not there’s a competitor occupying another office facility. It may be unlikely at the outset, but if you don’t do your homework, participating in an office tour there will be a waste of your time.
Questions to Ask the Landlord’s Agent
#1. What’s the landlord’s build-out policy?
As we’ve covered previously and more in-depth, it’s important to consider the various types of build out styles and to determine which is best for your company’s situation. If the landlord will be flexible and negotiate different tenant improvement allowances, it’s a good sign that they’ll be helpful and responsive throughout the life of the lease. However, if they’re committed to a single TI allowance type that doesn’t align with your budget and preferences, you should look elsewhere.
#2. What kind of maintenance is included in the lease?
Some landlords include a shared building maintenance fee to keep after-hours access controlled; others require tenants to provide their own janitorial and upkeep. Either way, it’s important to know who to call should your heating, elevator, or electrical goes down during the workday.
#3. What’s the process to install Internet and telephone services?
Depending on your industry, you may have very little need for high-end internet access, but for companies working in software development or professional services, it’s critical to have a stable, fast connection in today’s modern world. Ask about the available ISPs and whether an infrastructure upgrade would be included in a TI allowance.
#4. What’s lobby access like?
As with your clients and customers, seeing the condition of the lobby during your tour will provide you a great first impression for the building. But going beyond appearances, you’ll want to ensure your employees, and yourself, have access to the building after hours and on weekends as well as preventing unauthorized visitors to your floor.
It’s also worth touring the building during busier hours in the morning, at noon, or around 5 PM. If it’s crowded and uncomfortable for your employees as they come and go, it could be a negative factor when compared to other properties.
#5. How many tenants are in the building?
Common in commercial leases are cost-sharing for shared areas, maintenance, and upkeep fees, so it’s important to know how many other tenants are in the building itself. On the other hand, it’s useful to know how busy the elevators and lobby will be throughout the day, as cramped shared areas can be headaches for employees and visitors alike.
During Your Tour
Check the parking garage – You’ll want to provide your customers and employees ample parking, but most buildings only provide a select number of dedicated parking spaces for each tenant. Drive through the parking garage and see just how busy the building is during a workday before negotiating for more parking. You might also check on the availability and access to public transit around and near the building itself – that may be a strong benefit for commuting employees.
Consider the restrooms and common areas – Again, you’ll want to analyze a potential space’s benefits for your employees and visitors. Ask for the location of the floor’s main restrooms and see how busy they are for the space provided, but take close account of the cleanliness of shared areas and the restrooms to consider the property management’s attention to detail.
There’s also the question of amenities – does the building provide an onsite gym, locker room, or shower facilities? These are small, but crucial features that could help you attract talent in the future as your company continues to grow and expand.
Keep your cards close to your chest – Commercial real estate brokers are always looking for opportunities to gain an advantage in a potential future negotiation. It’s important that even if you’re in love with a property to keep that between you and your tenant representation broker. Showing your enthusiasm toward a space will strengthen the landlord’s side and only wind up hurting you in the negotiation process. It’s also important to disclose that you’re looking at other properties – just don’t say which ones. If a landlord’s leasing agent asks you specific questions about your situation, direct them to your own representative.
Look for signs of construction – Is the building itself under development? Will that impact day-to-day operations? If so, for how long? You should also consider neighboring buildings and development projects that could impact parking, traffic, and noise levels in your new office facility.
After Your Tours
Make a list of priorities – Taking detailed notes after each tour will help you regroup with your broker after you’ve seen each property. While you don’t necessarily have to choose between the selection you’ve seen, it’s important to work with your broker to narrow down your list of priorities based on the properties you’ve seen. Go through each one with pros and cons to help your broker better understand what your needs are now that you’ve toured their first samples.
Ask for references – If you want to get a better picture of a tenant’s relationship with a prospective landlord, feel free to reach out to others in the building to see what their experience has been.
Return without representation – While you won’t get a private tour of the space, be sure to revisit the property during a different hour of the day than your initial visit to get a better idea of the level of foot traffic. Visiting during lunchtime or near the end of the day will give you a better idea of the volume of people coming and going, which could have an impact on the experiences of your employees and customers.
While a guided tour will certainly provide you an opportunity to judge the space and the leasing or management staff, you should also bring in others in your organization for a private walkthrough, if possible, if you’re strongly considering a vacant space. And while this process is always challenging, the excitement of finding the next stage for your company is a worthwhile endeavor, but keeping a commercial tenant representation broker involved throughout the search is a major benefit to business owners of every size.
Now that you’re equipped to venture forth and find a suitable new space for your company, the search can begin in earnest. It’s an exciting endeavor, but one you’ll need to pursue carefully. No matter where you’re located, it’s easier than ever to find a great location for an expansion or first office that matches both your budgetary and workplace needs.