Last Updated on May 5, 2022 by Andrew Flint
The art of the real estate deal is a nuanced and finesse coordination between the tenant, their tenant representation and of course the landlord on the other side of the deal. In commercial real estate, the deal process can be long and complicated. You’re ready to find new space for your business.. But you have many questions.. How do I find the right building? What square footage supports my growth goals? What are some of my financing options? What am I going to need once construction begins?
The good news is that there are experts to aid you. Tenant Representation brokers are your confidants and advisors throughout this process. They help you search, and negotiate with the Landlord and their broker. Occupier was founded by two Tenant Rep Advisors with the goal of connecting brokers and tenants throughout the entire lease lifecycle from signing a new deal to closing the books for accounting. So, after you’ve hired a brokerage firm to support you, these are the next steps you’ll have to follow as you navigate the deal process.
The planning phase of a new deal is one that’s fraught with numerous decisions: finding out what size space you need, where your ideal location might be, and whether you want private offices or open floor plans. It’s also time-consuming; there are many factors that go into setting the foundation for your new space. Having realistic expectations on your move in date as well as what you want for what price is crucial. It is also important to understand how your real estate decisions impact your business goals whether that is your growth plan or cultural vision.
This is where the fun begins! You’ve narrowed down your space search criteria by geographic region, square footage, space usage and ideal floor plan. Now it’s time to tour properties. There is no better way to gage a space than to tour it. From here you can start analyzing price per square footage, examining comps, and gathering site selection information.
- Comps – Track all comps and easily compare data points to strategize your next space.
- Site Selection – Keep a depository of site selection data.
- Proposals – Create, edit, and collaborate on proposals.
If you are a broker, or Transaction Management user then you can export your deals site selection, comps, and proposals with Occupier.
You’ve found a space that fits your business needs. Now it’s time to negotiate! This is where the expertise and experience of your Tenant Representation Broker comes into play. You’ve outlined the needs of your space, you’ve done your due diligence, and set a budget, now you’re ready to make an offer.
Consider your space’s needs. Will you need to make renovations prior to moving into your space? Then make sure your lease agreement includes tenant improvement allowance in which the landlord provides lump sums of money for space improvements. Or perhaps you have growth plans ahead? Make sure you have a right to expand clause. This clause provides the tenant with the options to lease additional space from your landlord. In many ways the negotiation stage is the crux of the deal process.
Congrats, you’ve made it to the Letter of Internet, or LOI stage! This is where both you, the tenant and the landlord have agreed to proceed on a lease. The LOI is a non-binding contract that is typically presented by the Tenant Rep Broker to the Landlord outlining the key deal points including financing, due diligence, critical clauses and date of possession etc. An LOI acts as an ideal middle ground between the landlord and the tenant to show good faith between the transaction process.
Now comes the binding contract! Before either party signs any legally binding documentation you are going to want your legal advisor to review terms. As a tenant your council should examine, vet, and negotiate any potential risks. From critical dates, clauses, terms, and amendments, legal review is crucial to ensuring your business’s interests are well accounted throughout the duration of the lease agreement. Once both parties have review, amended and/or removed any clauses then you are ready to sing on that dotted line.
The space is officially yours, now you can build it out for your needs. Before making any big changes you’ll want to secure a design team and contractor partner to bring your vision to life. Once you’ve done that, now you can determine your timeline, budget, permitting, and plans with your design and construction team. At this final stage, you are working on the fine details, from layout, furniture, fixtures, paint and more. Soon enough your organization will be moving into your new space!
There are numerous moving pieces throughout the deal process, so having a single source of truth from which all stakeholders can collaborate is a game changer. Occupier is built so brokers and real estate teams can work together to get deals signed. Request a demo with our team to see how Transaction Management works for your team or how broker deals work for your brokerage.