While your ultimate decision on leasing office space will be based upon how it supports your business goals, the building tour is an initial litmus test. A thoughtful inspection of a building and space may identify potential issues that you can address early on in negotiations as well as avoid dead-ends. Before you look at new office space, here are some “do’s and don’ts” to consider based upon my 20+ years representing office tenants in Chicago and nationally.
- Hire a tenant representative and have a signed agreement with their firm defining scope of agency, roles and responsibilities, etc. Crossing the building threshold without a signed agreement may create legal liabilities if your broker relationship sours.
- Know how much space you need. Have your tenant rep develop a preliminary space program or, if you’ve already engaged an architect, have them develop a space program. You may be surprised at how efficient you can become with today’s new workspace standards.
- Have your tenant rep preview the spaces you originally short-listed to tour. While experienced tenant reps will have likely been in all the buildings you’re considering, they may not be familiar with the specific spaces. To gather more intelligence as well as eliminate any dead-ends, having your tenant rep preview the spaces in advance is an invaluable exercise.
- Include the decision maker or decision influencer on the tour. Also, include key project team members, project manager and architect for their added perspectives.
- Limit the tour to preferably 3 or 4 buildings. With 5 or more buildings, there is usually inadequate time to tour each building and the buildings begin to run together.
- Include buildings with different owners to foster competition.
- Listen to the building agent’s presentation. For better or worse, the building agent is usually the prospective tenant’s first impression of the owner. If the building agent is a dud, that may likely say something about the owner, as they hired that agent. Note: if the building’s owner and/or asset manager is present, that is a good sign and demonstrates the interest level of the owner.
- Ask questions. Preview with your tenant rep questions you plan on asking at each building. While building facts and deal terms will be fleshed-out in an RFP, there are essentially 4 categories of questions that you may want to consider:
- Owner & Property Manager.
- Owner’s history with the building and other buildings?
- Owner’s vision for the building over the next 5 years?
- Individual property management team’s history with the building?
- Commuter access including public transit options.
- Proximity to coffee shops, lunch spots and restaurants.
- Any planned developments in the immediate area?
- Neighboring Tenants.
- Any competitors?
- Who are the major tenants and what are their plans?
- Are there any tenants that are dense users or those with high customer traffic?
- What are hours for HVAC?
- Building security and after-hours access?
- What capital plans do they have for the building?
- Signage opportunities?
- Are there back-up generators for the entire building or just life-safety systems?
- Is there a redundant power station supply?
What level of internet connectivity is in the building? See my earlier post about WiredScore building certification
- With today’s building amenities “arms race”, what amenities do they have and what, if any, are planned?
- Owner & Property Manager.
- Use your smartphone to take pictures and videos. In doing so, observe what level of signal strength you receive in the building and in the space you are touring.
- While in the space, pay attention to noise levels as well as amount of natural light. Sun exposure on the south could be a challenge to adequately cool. Along those lines, look at the exterior windows and glazing. Also, observe the condition of the window treatments.
- Your architect will be looking at the window mullion spacing (if window offices are planned) as well as the depth of the space and column locations.
- As a growing business, you will want to see if there are potential expansion spaces.
- Look around and inspect restrooms and common areas (including parking areas). Besides looking for the level of quality and maintenance, your architect should see if there are any ADA issues. If so, these should be raised in the RFP.
- Revisit the building during peak hours, in the morning and late afternoon.
- Survey tenants. If the building becomes a serious option, have your tenant rep survey tenants in the building to get a first-hand account of their experience with the building, ownership and management.
- Avoid showing excitement about building or space. Keep a “poker face” so as not to tip your hand.
- Don’t be distracted by existing improvements in the space. Try to look at the space as a blank canvass, unless there’s value to some existing improvements that you would like to retain.
- Unless there’s a tactical advantage (i.e., creating competitive heat for a lease renewal), consider not disclosing tenant’s identity. Instead, provide a generic description with assurances about stability, e.g., Fortune 500 financial services company. Otherwise, word will spread quickly which may cause some unintended consequences, e.g., employees become concerned about moving. If the building makes the short-list to issue an RFP, then the tenant’s identity will be disclosed.
- Savvy leasing agents will try to elicit information from the tenant. Tenants should say little and deflect questions to your tenant rep.
- Don’t say which or how many other buildings are being toured.
- Avoid answering any financial questions (e.g., “what’s your budget?”) and again deflect those to your tenant rep. They will be addressed in an RFP, if they make the cut.
Blackacre Advisors LLC
DISCLAIMER. Our writings are from a real estate transaction perspective and for informational purposes only. Nothing herein shall be considered legal, accounting, tax, or architectural advice. Please consult with the appropriate professional(s).