The Tenant Representation Process
has become increasingly complex and time consuming requiring many steps to deliver the optimal solution in a changing
market. Tenants must think strategically to manage the risks inherent in a commercial real estate transaction and this necessitates
reliance upon the information and advice of a trusted real estate professional. Some basic steps include:
Lease Abstract – Review and summarize key business and legal issues
in the existing lease(s) to fully understand the rights and the obligations of the parties when setting goals and creating
a strategy to achieve those goals.
Invoice Review – Review
landlord's invoicing to determine if the billing is appropriate. Review could uncover improper or erroneous charges but
is not intended to serve as an accountant's audit. Figures will serve as the basis for a financial analysis and projection
of the existing obligation and the impact the obligation may have upon a new transaction; either renewal or relocation.
Financial Analysis & Projection - Create a pre-tax
picture of the Cost of Occupancy based upon basic rent, electricity, real estate tax and other escalations, commercial occupancy
tax and other related costs. This analysis and projection will help to determine what impact the remaining obligation
will have on renewal or relocation and will serve as a comparison to alternatives being considered.
Strategic Planning – Achieve a consensus on objectives and determine
the optimal timing to engage the market. If timing is right, develop schedule for the Transaction Management Process and begin
selection process to create a team of core consultants including architect, engineer, construction consultant, telecommunications
advisor and experienced office leasing attorney.
Financial,
Operating and Qualitative Goals - Meet with decision makers to establish preliminary financial, operating and qualitative
goals. Goals are often adjusted throughout the transaction management process.
Market Analysis – Create a market report and analysis for the target market area that
includes offering facts on a range of select properties including vacancies and current asking rentals. Inspect properties
and create a “short list” of viable alternatives.
The Pro-Active Tenant – Users of leased
property commonly experience changes in needs during the term of a lease; the need to grow, shrink, reduce
the cost of occupancy, the layout, to secure an early renewal or relocate to a more appropriate location. Typically tenants
assume that they are unable to address these issues because there is a remaining lease term. However, information
and advice of a real estate professional could place such goals within reach. Further, the real estate professional will strive
to deliver flexibility in a new transaction to address change and manage risk.
A pro–active approach by the tenant is the first step in the tenant representation process.
Seek and secure an experienced, intelligent and energetic real estate professional to advise and assist. Allow
ample time to manage the entire process without undue pressue on negotiations and decision making.
