This article is the second of a two-part series on commercial property tours. The first part in the series looked at property tours from the perspective of a commercial real estate broker on the landlord side of the transaction.
Whatever is driving a company to look at commercial real estate space – lease expiration, changing business needs, or any number of other considerations – one of the most important aspects of the process is a tour of the potential options.
But rather than a one-size-fits-all process, the approach differs widely depending on the size and type of the company which will be occupying the space – and a tenant rep broker is right there on the front lines.
Pre-Tour – Timelines are Key
The first consideration is timing. A technology tenant looking for 6,000 SF of relatively straightforward space may only need to start the process six to eight months ahead of their projected move date.
At the other end of the spectrum, a larger company looking at a potential new headquarters location may need to look at a time frame 36 months out – or even longer if commitment to a newly constructed building is a serious consideration.
From there, the tenant’s broker will survey available properties which fit the client’s size demands and time frame, and then continue to refine them based on what that particular company is looking for.
“It’s really important to understand a tenant’s expectations and needs early on in the process,” says Margaret Power, Senior Associate for Cushman & Wakefield. “A company coming in from out-of-market may not understand the difference between the Seaport and Back Bay, or which areas might be the best fit for their corporate culture.”
At the end of those discussions, the goal is to have narrowed down the potential options to a shortlist of 15 properties or less, which sets the basis for the tour.
Tour Organization is Crucial
Organizing the property tour requires a great deal of coordination, with the tenant’s broker interfacing with the landlord brokers for each of the potential properties to create a schedule which works for all involved.
If the number of potential spaces means the tour will take more than one day, then the broker will look to segment the tour by submarket to minimize travel time for everyone involved.
Even if the properties are all located in the Financial District or Back Bay, it’s important to try to limit the tour to five or six spaces in any one day.
Beyond that, Power says, and the spaces may begin to blur together in everyone’s head, which only complicates the process down the line.
Final Decision-Making Driven by Many Factors
Maintaining the distinctions between properties is crucial once the tour ends, with side-by-side comparisons turning much more concrete, as shortlists are pared down further and further.
The factors which influence the final decision are as varied as the companies making them, and the spaces which may be the best fit in terms of company culture may not be the top option when viewed through a strictly economic lens.
At the end of the process, it’s also not just about choosing one location – even though that may be goal. Particularly in an active market, tenants may find that their first, or even second choice of location, has been leased since they first saw it.
Tenant brokers need to manage expectations regarding each property and communicate effectively to each client about the state of the market – eventually turning the property tour into a company’s new home.