Two choices, same building?

A tenant trying to choose between two spaces in one building should compare the two scenarios as if they were distinct street addresses.

Chances are the options are not the exact same size, so cost is clearly a factor. Provided the more affordable space poses no operational complications, it’s likely the best option. However, take specific note of the adjacent spaces, which should further delineate the options.

Consider strongly which space has more potential to accommodate growth and subsequently, how the landlord would respond to right of first refusal language. And with that mind, could additional concessions come into play?

Do either of the solutions present any potential neighbor concerns? Employees or customers of a fellow tenant could pose a disruption to business, which is rare in most professional settings, but not at all unheard of.  

Other considerations are floorplate shape and access to common areas. You’ll want to choose the space that will best contribute to your employees’ work practices. Also, take note of the move process, which can be a considerable drain on resources. Any complications to moving created by one of the options could provide reason to choose the other.

This kind of decision may also come down to existing finishes. Provided neither space is a first generation shell, fit-up costs will be critical and more than likely the ultimate driver of which lease is signed.

Remote Workers Complicate Real Estate Decisions

By 2015, the average amount of office space needed by an employee needs is expected to decrease by 100 square feet.

It’s too easy to say this shift is a result of mobile business and remote workforces. Everything from the size of desktop computers to efficient furniture design is making an impact on how much office space a company needs.

Therefore, those who make decisions about office space should feel safe discussing the efficiencies of web connectivity without sending up warnings about relocation or office downsizing. It’s an issue that anyone charged with making choices about real estate should be ready to explore.

Yahoo! CEO Melissa Mayer made business world headlines when she ceased work-at-home practices for the Internet technology giant. Many consider her decision a win for the workplace, recognition of “the office” as the fuel generating creative power and intellectual property. In many ways, the notion is true.

There is no denying the cost benefits of less furniture, fewer hardwall offices and reduced time waiting for the copier. Financial leaders are driven to cut costs and find ways to do more with less.

Thus, to what extent should they consider remote teams when making space decisions? It may be important to at least plan for out-of-office employees, keeping in mind which teams may be more capable of producing outside the office. And, if less office activity will impact overall morale and service quality.

Like all issues with stark extremes, the likely solution probably lies somewhere in the middle. However, the mere consideration of a remote work team should not alter stock price — it’s simply the mark of an insightful occupancy plan.

Office Space as an Extension of Business

Your office space should be a place that fosters ideas and reflects the mission of the company.

Retail users know this concept well, as evidenced by how critical traffic counts and street-level signage often become to real estate decisions. In fact, without the right space, many retail operations suffer.

Corporate office users should approach space with a similar mindset, considering it an integral component to productivity and long-term strategy. Even small, newly launched companies should consider office space when making even the most tentative of growth plans.

When planned in the context of how an organization will grow, office space becomes not just a place to do business, but an extension of business. How will a company use its space to engage customers or leverage branding concepts? What about internal communications? How a company interacts with itself is as crucial to space planning as how it works with customers. 

Occupancy costs can impact business in a multitude of ways, ranging from over-zealous interior design choices to the landlord’s outdated energy management system. Therefore, when office space is considered not just another monthly expenditure, but a productive investment in the stability of the company, a very clear projection of future growth will appear and healthier financial decisions prevail.

Think Local

As the nation continues to be macro-economically focused aspiring office tenants should focus locally. The conditions in your market are what count, especially in the midst of a vexing media monsoon about the recovery of real estate.

“Hyper-local” is a marketing buzzword careening out of the intersection of social media and mobile marketing that relates to GPS-driven, corner-by-corner customer outreach. Savvy retailers can use geolocation tools to pinpoint nearby customers and hit them with text deals and Facebook coupons, for example.

Our consistent interactivity is driving a great deal of business today, so much so that coffee shops only a block away apart may have drastically different levels of revenue. Thus, it becomes increasingly difficult to factor in macro-economic issues when considering investing in a coffee franchise.

When it comes to commercial real estate decisions, office tenants should consider thinking similarly. In this age of urban renewal and doing more with less, the right space may be only blocks away from the wrong space. Any professional who has watched cities rebuild knows that "good" can go to "bad" in only 100 yards. 

On the whole, the national market's condition remains hard to clearly decipher. Yes, there are signs of national recovery, but none clear enough to read without an easy contradictory sign being found to point the other way. Lending is up, as is construction. Yet, tenant concessions abound.

If you need new space and the few locations you've driven around look to be possible fits, then by all means, start poking around. Is a large development announcement only a few weeks away? Did the city just approve a zoning change? These are hyper-local factors for your market that won't show up on national reports; these are the factors that matter to your business and your decisions about office space.     

Making the Cut

It's not easy to decide on a new space for your company. Should it be only price driven, and to what extent should location factor? This crucial internal debate, among many others, is at the very least a strong argument for working with a tenant representative, who can offer detailed lease and property comparisons.  

Cost per square foot is an obviously defining characteristic of your decision, but it's rare for it to be driving decisions at the end of your search. The best market survey strategies use rent — and location — on the front-end to establish the most likely properties. By the time your search has only a couple of choices left, price should no longer be an issue unless a landlord becomes suddenly gracious or highly competitive. 

The amount of needed space, which ties directly to your company’s projected growth, will become paramount as alternatives dwindle. Which option has the most opportunity for expansion? How willing is the landlord to accommodate your growth demands? Fitting into a tight space for cost reasons in spite of clear-cut future staff growth will create significant productivity issues.

If very equivalent scenarios have produced similar proposals from landlords, your decision might very well come down to gauging which landlord will be the better business partner and which lease is the most flexible. The more favorable may even warrant accepting a slightly higher total annual occupancy cost. Gut feelings count for a lot in business, and if you feel you'll need to audit your lease every year under duress, it's probably not worth a small discount. 

In short, space decisions can be brutal. But like life, all the most important ones are.