Just like the Summer Olympics, the opportunity to renew your office lease or relocate to a new building only comes along once every few years. And it’s an event that should be taken seriously because its outcome can have a major impact on the future of your business. Luckily, you don’t have to spend hundreds or even thousands of hours training to negotiate your lease. There are experts who have put in that time on your behalf. So, let’s take a look at some of the more important steps that you and your advisor must take in order to take home the gold on your next office lease.
Train Early and Often
I’ve written about this in the past, but I can’t stress the importance enough: Timing is everything. Olympic athletes didn’t start training a few months before the games; they started years in advance. You might not need years of preparation, but depending on the amount of space you have and/or need, a year is probably the least amount of time to budget. For larger office users, two years is even better. I recently restructured a client’s lease two and a half years early, which yielded a 27 percent savings in rent. Remember, you want to compete from a position of strength as you negotiate on a new or existing lease.
Know Your Competition
Since you’ve started early, you have plenty of time to complete due diligence on market vacancies and rental rates. Remember, the market isn’t the same since your last lease. Whether up or down, vacancies and rental rates have changed, and to properly negotiate, you and your advisor need to know exactly what kind of deal terms will put you in the best position to score a a win given your requirements.
Analyze the Playing Field
Once you’ve secured proposals on your short list of sites, it’s a good idea to have your advisor create a side-by-side financial analysis of the properties. Even if cost isn’t your number one concern, it’s good to know how each building stacks up. You can then properly leverage each building against the others to try to get the best terms.
Keep the Pace
Now that you’ve got one or two properties you’re comfortable with, make sure you keep your momentum. If you become complacent and start losing focus, things can go south. You might lose the space to another tenant. Or another, larger deal within the same building can close before yours, which now takes precedence over your lease. There are an array of events that can derail your new deal, so stay focused and follow through to the finish line.
If you take my coaching to heart, you’ll be company standing on the center podium, holding your gold-medal caliber lease high in the air for all to see. Maybe you’ll even set the stage for your competitors to want to follow YOUR lead instead. Is it time to check in with your advisor to see if now is a good time to start training?
Based in Princeton, N.J., Vinny specializes in tenant and landlord representation for Colliers International, working directly with his clients in the acquisition and disposition of office space. For more commercial real estate insight and trends, follow Vinny on Twitter.