By Peter Shakalis

The earlier the tenant develops and engages this real estate team the better off they will fair in the process. The tenants real estate team works to ‘level the playing field’ between the tenant and the landlord, considering that the landlord has at its disposal a team of building leasing agents, construction contractors, architects, real estate attorneys, vendors, and others all actively engaged in the office leasing process.

The tenants real estate team should at a minimum include a commercial real estate agent, an architect and a real estate attorney. Additional team members may be required depending on the nature and complexity of the transaction. These might include information technology consultants; telephone consultants; construction project managers; state and local government incentive experts and furniture vendors.

Office lease negotiations are complex involving evaluation, analysis and negotiation of items such as building operating escalations, floor loss factors, office construction and work allowances, electricity costs, financial rent analysis, lease verses rent commencement dates, base years, expansion/renewal/cancellation options and other issues. The tenants leasing agent must be knowledgeable in these areas and should exclusively represent the interests of the tenant in this process from the beginning. With the advent of computerized listing systems, finding space is the easiest part of the agent’s role. Negotiating the previous mentioned business points of the lease, understanding the tenant’s business needs as they relate to its space considerations, and the ability to coordinate the various other disciplines in this process is imperative. Selecting the right broker therefore should be done carefully, with an emphasis on past experience, expertise and recommendations.

Working hand in hand from the start with the leasing agent should be the architect. The tenant who goes out looking at new locations without first consulting with an architect to determine its needs, often wastestheir valuable time looking at the wrong space alternatives. The architect determines the parameters from which the leasing agent can then identify suitable locations. They are responsible for determining how many rentable square feet are required (very different from square feet) based on a thorough evaluation of the tenants current and future operational needs, a process called ‘programming’. This evaluation serves to determine not only how much space the tenant needs, but the building floor configuration that is best suited for the tenant - center core verses side core floor plates as an example. Particular services the building must provide to accommodate the tenants operational needs such as after hour HVAC, extra electrical capacity or perhaps 24/7day a week access will be identified. While some landlords offer architectural services to prospective tenants, it is wise to have the tenant’s own architect review the plans as well.

The third member of the team is the attorney who will negotiate the legal issues in the lease. While tenants often use their corporate or personal attorney to handle a lease transaction it is always advisable to use an attorney who is experienced in negotiating landlord/tenant issues. Leases are complex documents often more than 100 pages in length. Moreover the tenant can rest assured that the landlord will be using a real estate attorney to negotiate on its behalf. An experienced real estate attorney will have the ability to navigate difficult issues in the lease and work constructively with the landlord’s attorney to reach agreement, which often is the difference in making or loosing the deal. Provisions agreed to in the lease will be referred to by the landlord and tenant over many years, emphasizing the importance of getting the most favorable terms possible.

The process of securing a new office facility particularly in New York is often a difficult process with many twists and turns. Having a good team in place from the start can facilitate the process and help avoid many of the pitfalls.

Peter Shakalis is a Director at Colliers International NY LLC