REAL ESTATE FOR BUSINESS: 6 KEY STEPS TO MAKE YOUR OFFICE YOUR BEST BUSINESS LEVER
Would you like to achieve your development objectives, improve your image, and attract the brightest talent? Good knowledge of the steps involved in real estate could be useful in the strategic analysis of your workspaces. Bender & Associates thus proposes a series of articles on the importance of the real estate process when it comes time to renew your lease, relocate, or make an acquisition.
Here are the steps involved in a thorough real estate process:
- Assess your current situation
- Analyze your objectives and expectations
- Analyze your needs
- Analyze the offer
- Assist in decision-making and plan development
ASSESS YOUR CURRENT SITUATION: THE CORNERSTONE OF A SOUND REAL ESTATE STRATEGY!
Your company’s workspace defines you. It allows your business to grow and successfully carry out the numerous projects in which it has been involved for so many years. Nevertheless, in most cases, these office spaces are not perfect: the layouts are outdated, the ventilation system is noisy, or the poor acoustics are the cause of many disagreements between occupants. On the other hand, your office also has several advantages; for instance, its location, the neighbouring businesses, and the number of parking spaces available may be an attractive bonus for your employees. Moreover, you may have just finalized the amortization of your initial development costs, which makes you reluctant to consider the possibility of moving in the short term.
You’ve given it a lot of thought. Like many occupants, you may consider opting for the status quo, convinced that moving would be too costly, would result in a loss of productivity, and would increase your current rent. But is that really the case? Should you base your decision solely on the financial aspect of the matter? Have you considered your strategic challenges, your desire to merge with another company, or the issue of staff retention?
INFORMED DECISION-MAKING: ASK YOURSELF THE RIGHT QUESTIONS
It’s no secret: nearly 75% of all transactions end with a lease renewal. However, these numerous renewals aren’t always to the occupant’s advantage! In order to optimize your real estate decision, carrying out a comprehensive assessment of your current situation is one of the most important steps in the process. In other words, how can you “compare apples to apples” without all the information required to evaluate the various options available to you?
MONTHLY RENT: MORETHAN A SIMPLE PAYMENT
One of the first challenges of this evaluation will be to determine precisely what your current occupancy costs are. Like many, you pay your rent on a monthly basis. But are all the costs covered by these payments? For example, have you accounted for the 13th bill for property tax adjustments and additional rent, cleaning costs, excess parking fees for certain employees, or the cost of leasehold improvements that you chose to pay earlier at the start of the lease? Whether they are amortized over three, five or 10 years, these expenses must be factored into the scope of your current situation.
START-UP COSTS: AN IMPORTANT ANALYSIS
In the event that you are already considering a move, several factors must also be taken into consideration in order to avoid any slip-ups. Do not overlook the clauses in your current lease that may work to your disadvantage. Indeed, certain clauses such as restoring leased premises or wiring removal could potentially increase your initial costs. On the other hand, continued occupation could affect the early relocation you had planned. Finally, a tacit renewal could commit you to a new lease term, despite your intention to leave your current premises. It is therefore important to give it some serious thought!
THE PERIOD LEADING UP TO EXERCISING YOUR OPTION TO RENEW, AN ADVANTAGE
Usually, the time limit provided for in a lease for exercising your option to renew is between six and 12 months prior to its expiry. It is therefore wise to conduct your real estate procedures prior to the exercise date of this option in order to make an informed choice, and above all, to gain leverage to negotiate to your advantage. In other words, in addition to providing a common base on which to evaluate your options, having all the necessary information about your situation on hand, prior to the exercise date of your option to renew, will give you the flexibility your require in order to negotiate signing a new lease with favourable terms or renewing your existing terms and conditions.
OUR NEXT ARTICLE: ANALYZING YOUR OBJECTIVES AND EXPECTATIONS
Over an above your current situation, your company’s development also plays a crucial role in the full consideration of your real estate options. The next article, which discusses analyzing your objectives, will help guide your real estate reflection and strategy!
For more than 20 years, Mark Bender & Associates has been advising and representing office space users to transform real estate into a business tool that goes beyond standard operational needs. Do you want to work with a strong team who has developed real estate expertise in the greater Québec City area? Contact us today.