Let’s cut to the chase…when should you start looking for a new office?  Most brokers will tell you at least one year before your current lease is set to expire.
While all situations are different and factors regarding location, cost, size and type of space will play a factor, one year out is a good time to start...but starting earlier can save you time and money.
It seems like a long time, but it can go by quickly.  Let’s put together a timeline for Joe’s Insurance.  Joe is looking for 6,000 square feet for his business.  He would like to be downtown or west Knoxville, in nice space.  It doesn’t have to be Class-A space, but pretty close.
Step 1-Find a broker, of course.  Depending on how much time Joe has to devote to the process this could take a day or a month.
Step 2-Joe sits down with his broker.  He needs to know what part of town Joe needs to be in? How much can Joe spend per month?  Does Joe need a space with a lot of offices or can an open floor plan work?  Other details include; parking requirements, hours of operation, length of lease etc…
Step 3-Property Search:  The broker performs a search through the commercial MLS , talks to other brokers, and relies on their basic knowledge about what is available.  This will provide an initial list for Joe to review.  Some properties will be deleted, others may be added, all based on cost, location and the type of building.  This will allow Joe to tour the spaces he is interested in without wasting vast amounts of  time.  Hopefully after the tour Joe will have narrowed his list to 2 or 3 spaces.  This entire process can take a week or three months.  It all depends on how quickly of a move is required and what is available. 
Step 4-Here is where is gets tricky…determining where Joe really wants to go.  Some times it is easy, there is one place you want to go, everything is perfect.  More often than not there are multiple locations that would work.  In a situation like this an Request for Proposal (RFP) orLetter of Intent (LOI) is effective in determining exactly what you expect from the Landlord and what he expects from the tenant.  Typically an LOI or RFP will spell out the length of the term, the lease rate, and tenant improvements that the landlord will provide.  They can also get VERY detailed.  I’ve had LOI’s that are 1 page long and I’ve had LOI’s that are 35 pages long.  This process can take anywhere from 1 week to 2 months depending on how firm either party wants to stand on a specific issue.  With the LOI/RFP in place you can determine what is best for an office based on actual comparisons of rates, tenant improvements etc…   If you would like more information about LOI’s/RFP’s let me know jcazana@cornerstonecres.com.
Step 5-Lease Review.  Once Joe has made his decision on the space he wants the landlord will (typically) provide a lease for the space.   The lease should include all the information that was negotiated in the LOI/RFP as well as MUCH more.  You will become familiar with words like default, estoppel, force majeure and many others.  While brokers can provide basic insight in the lease it is imperative that an attorney review this document.  Leases are legally binding and if you don’t understand the details it can get you in a lot of trouble if you default on the lease.  How long will lease review take?  One week to a year!  It just depends.  My favorite story about negotiating a lease was just a two years ago.  On my first conference call with the tenant’s attorney she told me she had just found out she was pregnant.  At the time of our last conference call to seal the deal her baby was 4 weeks old!  That is an extreme but it happens (especially with corporations).
There are many other details that are some times worked in to the process. 
  • Space Planning: If a tenant is moving into brand new space (which has never been built out), or a significant amount of construction is required to prepare the space for occupancy, a space plan from an architect should be considered.  This will allow the tenant to determine how much space they really need.  How many offices fit in the space, the most efficient use of cubicle space, where the conference room should go etc…This takes anywhere from a week to a month depending on the size of the space.
  • Construction Estimates:  The space plan will allow the tenant or landlord to determine how much construction will cost.  The last thing you want to have happen is to budget construction costs at $10,000 and it ends up being $50,000.  I’ve seen it happen.  This should take less than 10 days.
  • Construction:  Again, depending on the size of the of the office and what is involved construction typically takes between 60-90 days.  That includes construction documents, permitting and actual construction.
So there you go, a “looking for space timeline” in a nutshell.   If you need to find space in 2012 you should already be looking.
You can reach me at Cushman & Wakefield|Cornerstone CRES if you have any questions about property searches.  865-617-2989 or jcazana@cornerstonecres.com