How to Find the Right Office Space in Tough Economic Conditions

We all know the economic climate can present some real headwinds for those looking for commercial space. It’s a tough time to be a tenant, with lease rates in some markets now reaching historical highs. But despite these trying times, there is still an opportunity to find the right space, on terms that will work for you.

As a commercial real estate agent, I sympathise with how hard it can be to navigate the current market conditions when searching for office space, or constructing new facilities. You want to make sure you get the right unit at the right price – and not be taken advantage of by an eager landlord or developer looking for an easy payday.

I’m here to help guide you. In this article, I’m going to share my best advice on how tenants can make sure they secure the best possible deal in tough economic conditions. Read on to see what steps you should take before signing any lease or binding agreement.

Evaluate Your Finances and Cash Flow

Knowing what you can reasonably afford should be your starting point. Assess your current budget and determine how much you have available for rent and other associated costs—this will help shape your search for space. You also need to consider if there are any particular lease terms that will make it easier for you to manage financially—such as flat lease reates or free rental periods, to help reduce upfront costs.

It's also worth considering what contingencies may come up that could reduce revenue, such as a decline in sales due to customer disruption, or a change of operations due to Government regulations. You’ll need to compile a realistic budget, prior to starting your search.

Analyze Your Negotiation Power

When the market is tight, landlords have more control over the terms they can offer, while tenants may have little or no control in negotiating those terms.

Therefore, it is important to understand what you have to offer that could make your business attractive to a landlord. This could include offering a longer-term lease, putting more money down as security deposit or agreeing to certain measures that would benefit the landlord in the long run. Knowing these details in advance will be essential for getting an attractive deal.

An experienced agent/broker can help you evaluate your situation and better understand how negotiating power plays a role in determining favorable leasing terms and conditions. They can help you assess what your business needs, and how best to leverage that in negotiations with landlords. It’s all about building an iron-clad case!

Having an understanding of your strengths and weaknesses will give you the tools necessary to secure an ideal space while also making sure both parties walk away from the transaction feeling satisfied. Afterall, like it or not – a lease negotiation is ultimately a compromise.

Look for Hidden Opportunities

The current economic situation may be daunting, but there are opportunities to be found if you know where to look. Even if a space seems overpriced, or if it's not exactly what you imagine for your business, there could still be some hidden gems in the mix.

It's also worth considering that with new regulations and restrictions due to COVID-19, many businesses have had to rethink their operations; meaning more spaces may become available for rent, as some companies shift away from traditional leases.

Negotiate the Lease Terms

If you find a space that looks promising but the terms don't quite check out in your favour—start negotiating! You may be able to get favorable terms such as reduced rent, deferred payments or other concessions to sweeten the pot. Lean on your agent/broker for advice.

Capitalize on Vacancies

In uncertain times like these, some landlords may be willing to offer incentives or discounts just to fill up their vacant spaces. Don't hesitate to ask questions and explore whether a landlord is willing to negotiate; this could mean great savings for your business in the long run.

Remember that there are still opportunities for you out there if you look hard enough. Keep an open mind and don't be afraid to put your negotiation skills on the line—you never know what kind of amazing deals might come from it! Again, let your agent/broker do the heavy lifting; they know exactly how to play it.

Assess on-Site Amenities and Unit Location

When you're looking for space, it's important to assess on-site amenities and the general location of the office. You want to be sure that these features meet both the current needs of your business and what you might need in the future. For example, maybe you need space near public transit or with access to bike lanes so your employees can easily commute from home.

Distance from clients

You should also consider the distance between you and your clients—do they often need to come to your office for meetings? If so, does your office have enough space for them to visit? Is there good parking nearby for them? Is that parking free?

Check out local amenities like restaurants and shops that are close by—these might appeal to your staff or potential investors. Even if staff aren’t physically in the office full-time, they might still like being close by other services and entertainment options.

Finally, make sure there aren't any zoning restrictions or local ordinances that could affect you. Most areas will have these in place already: Make sure they comply with what your company needs.?

Consider Alternative Space Options

Finding the right space in an uncertain economic climate can be tough, but there are several alternative options that you can explore to try and make it work. Here are a few things to consider:

Short-term leases

If you aren't sure how long you'll need the space, consider looking at short-term leases, as they provide more flexibility. You won't be tied into a long-term contractual obligation, and you may also qualify for shorter lease periods and better rates, since landlords want to secure tenants even if it’s only for a limited amount of time.

Subleasing or shared space arrangements

Think outside the box when it comes to spaces and consider subleasing or shared space arrangements. You can still get the use of the space without being responsible for the entire area - or all of the rent - allowing you to save money. Plus, you’ll have access to amenities such as conference rooms, parking lots and more.

Negotiate lease terms

Get creative when negotiating your lease terms and don't be afraid to ask for things like free rent periods or tenant improvement allowances. When landlords are willing to work with tenants, they are usually open to taking on some of the financial responsibility - so don’t feel afraid to ask!

Establish a Timeline for Leasing

When you start your search for commercial space, also establish a timeline for leasing. This will help you stay on track and make sure to leave enough time for any daunting processes that could delay the final execution of leases, or the process of moving in.

How Long Will the Process Take?

Depending on the type of space you are looking for, the amount of time it takes to lease a space can vary considerably. Smaller spaces with fewer complicated circumstances can be leased in a matter of weeks or even days while larger spaces with longer leases and more paperwork can take months.

What Are Some Common Delays?

Common delays in the leasing process include:

• Negotiating lease terms and making sure everything is in order before signing the lease papers
• Getting any approvals needed from landlords, local governments, banks, or other entities
• Doing inspections or renovations needed before move-in
• Obtaining permits or registering businesses with local authorities.

It's important to make sure you are aware of any potential delays so you can plan ahead and put yourself in a good position to get the space you want, when you need it. Having an experienced real estate agent/broker on your side can be invaluable, as they have experience navigating these types of processes and will help keep things moving along.

Conclusion

Finding the right space can be daunting – especially in uncertain economic conditions. But there is a playbook you can follow.

Do your due diligence about the building you’re considering—understand the costs and the ongoing changes to the market. Take the time to work with a knowledgeable real estate agent/broker who can help you in your search and guide you to the best deal. Be willing to negotiate on terms but understand there are limits to how much the landlord can compromise.

Ultimately, the lease you negotiate should be fair, exemplary of market conditions, and offer a good fit for both you and the landlord. If you go in armed with this knowledge and do your homework, you will be in the best possible position.??