Quality. As indicated above, this is driven by budget. If your stakeholders have a low budget, they must know that you will probably end up with a site with a quality that is budget reflected. This seems obvious for people in the real estate lease management field, but I was often surprised by how often non real estate people provided me with a budget that would barely get us a type B building.
Click to read Part I of this article.
When I would visit the site and then tell me of what type of building they had in mind, often providing me examples of other sites they had seen or visited. I would receive comments such as, “a friend of mine has his office at 123 Front Street’ and their site is much nicer than this, why can’t we get something like that?”
I would reply that because 123 Front Street is a Class A building and the rent is about 20% higher than the budget you gave me. With higher budget, I can probably find a similar site.
Having to justify why you cannot find a better site for a lower cost is one of these eternal explanations people that manage real estate leases seem to have to do. That is life.
Renovation. This is also driven by budget, but do not let this scare you away. In some cases, you might be able to find a great site that does need renovation but with a look design layout, you might be able to maximize the site in a way to reduce your lease cost. In some cases, it may involve converting a site. For example, you might be able to find a site is not an office site but that could be converted into one. Doing some cost analysis, you can find out how much you would invest in the site and still get the equivalent of a great lease.
I remember a few years ago we needed an office site and managed to find a site that had offices in the front and a warehouse in the back. Considering less than half of the site had offices and these were in poor shape, the landlord accepted a very low rent on a 10-year deal. We renovated the offices and built out additional offices in the warehouse section, keeping only a small warehouse section untouched. Even when adding the cost of the renovation (amortized over the lease period) to the lease cost, we were still getting a great rate for the space.
Data. If you were looking for a site to lease 25 years ago, data was probably not high up on your list of items to consider. Today it is actually vital to many companies. I am talking here about access to high-speed data. Before starting to look for sites, make sure you know what your stakeholders need in terms of data. If they need the speed of fiber optic, you need to consider this and ask the landlords of the sites you are visiting if fiber is available and if not, what will be the cost. For this, I often teamed up with the guys in the IT department to help me determine cost because on many occasions we had to bring in high speed data to a site that practically had nothing in the first place.
Parking. A growing concern, parking needs is something you need to know from your stakeholders. How many parking spaces do you need? It can also vary substantially from business unit to business unit within the same company. When asking the question about parking, I was often surprised by how much the needs varied. If you are looking for offices downtown that will host young people in certain fields like programming, the needs for parking will probably be much lower than if you are looking for an industrial site outside the city’s core. Knowing what the needs for parking will help you in your selection of sites.
Other. This generic item can include important elements not listed in the first six points above. When talking to the stakeholders, it is good to ask if there are other elements you did not talk about so far, special needs they could have which have been missed up to this point. You can bring up examples, such as a warehouse section, a cafeteria area, a gym, or other specialized area they need.
By finding out all the other elements that are needed in your site selection, you will have a better picture of the perfect site and this will help you rapidly eliminate sites when you find them. When I had a complete picture of what the perfect site was, I always took the time to explain this in details to the real estate brokers assisting me in the search. I would tell them what we absolutely needed and what we could be flexible on. Instead of being presented with a long list of potential sites, I would get from the brokers a very short list of already sorted potential sites that I could spend more time visiting. I would still ask for the unsorted list during the process, simply to make sure that the brokers did not eliminate a site that could be interesting and I would ask them the specific reason why they eliminated each site from the short list. Therefore, when I presented a final short list to the stakeholders, I knew I had done my homework and that no potentially good site had been eliminated.
Getting a clear picture of what the stakeholders need, where and when they need it even before starting to search the market will greatly help you save time and will allow you to propose to the stakeholders a short list of potential sites that meet their demands.