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There are three phases of the leasing process: project initiation, building selection, and construction or fit out.
The project initiation phase begins with the internal team of the company and their real estate representative defining the scope of the requirement. This includes the size and location of the office space as well as the timing of occupancy. The previous posts, Brainstorming Office Space and Determining the Agenda, help define the elements your space will require.
The building selection phase begins with a preliminary survey of all the spaces which are on the market and fit the requirements, compiled by the broker. After narrowing down that survey to perhaps 10 or so spaces, some of which could be in the same building, the broker and tenant go on a market tour to visit and inspect the spaces. From there, the properties are again narrowed down to a shorter list. After the drafting of an RFP (Request for Proposal) and issuing it to the properties on the short list, each prospective property issues its own response, and the negotiation process begins with a financial analysis and comparison of the proposals. Other members of the external team, the architect, contractors/engineers, legal counsel and finance lender, assist in the process.
During the negotiations, one or two properties may rise to the top of this list, and so not only negotiations but also selections are made. A final property is chosen and the terms negotiated are finalized. Those terms may include architectural plans, interior designs and construction documents. The tenant may also at this time order their equipment and furniture.
At this point a lease agreement is drawn up and signed.
The construction phase moves along the timeline of the construction period. Permits are obtained, equipment, phones, and data cabling are installed. The space is fitted out to the tenant’s specifications.
Finally the tenant moves into the space and the lease commences. This whole process can take as many as eighteen months, especially with an elaborate construction element. For turnkey properties, the whole process can be squeezed into a few months. But more time gives a tenant a negotiating advantage.
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WHPounds Commercial Real Estate, LLC is a commercial real estate agency located in Southern New Jersey. Founded and owned by William H. Pounds, II, its Broker-of-Record, the company has assisted in the leasing, purchasing, or sale of over 15 million square feet in Southern New Jersey. As a boutique agency, WHPounds provides a range of services, including asset management under WHPounds CRE Management, LLC.
Disclaimer: The information herein contained is in no way meant to substitute for competent, professional real estate and legal services and/or advice for the commercial or residential real estate market in your area, which may or may not conduct commercial or residential real estate transactions in a way similarly described in this blog series. WHPounds Commercial Real Estate, LLC and/or its agents is/are in no way responsible for poor decisions made or the making of poor decisions, which may or may not be based on the information contained within this blog series. WHPounds Commercial Real Estate LLC and/or its agents strongly recommend the employment of proper, competent, and professional real estate and legal services for the leasing or purchasing of a commercial or residential property.
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