Real property is a static thing. Buildings are not readily replaced. Interiors are expensive to remodel. Ownership and financing are structured over 10 and 20-yr horizons, all of which require long term lease commitments from stable tenants to make it work.
The problem of course is that these days are rarely stable. A company now must be nimble and flexible, which is directly at odds with the long term lease commitment, especially for the newer company. And since landlords are in the business of real estate, with few exceptions they almost always hold the advantage in lease negotiations. Here’s how to be successful.
Before you start a search for a new workplace, understand your short and long term strategic business plans cold, especially headcount growth. The size of your workforce over time is the best indicator of your space size and lease period commitment.
You must also consider the nature of your workforce. The trend today is away from private offices that isolate the individual towards open environments that encourage collaboration. A workplace with many private offices is inflexible and doesn’t easily accommodate headcount growth and contraction. An open plan design with modular furniture is more readily adapted to change. An open plan also allows for greater density. With an understanding of headcount and the nature of your workforce, you can now negotiate a new lease that better reflects your needs.
Remember, your business strategy and real estate commitment sought by Landlords are traditionally at odds. The search for a new workplace will be a long and trying process unless you understand these divergent needs and negotiate lease terms accordingly.
Michael Preiss is a commercial real estate agent with 20 years experience representing commercial tenants and landlords